Expenses for Institutional shares: Total 0.85%; Net, Including Investment Related Expenses(dividend expense, interest expense, acquired fund fees and expenses and certain other fund expenses) 0.85%. For Investor A shares: Total 1.14%; Net, Including Investment Related Expenses 1.14%. Institutional and Investor A shares have contractual waivers with an end date of 06/30/2025 terminable upon 90 days notice. For certain share classes, BlackRock may voluntarily agree to waive certain fees and expenses in which the adviser may discontinue at any time without notice. Expenses stated as of the fund's most recent prospectus. Data represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor s shares, when redeemed, may be worth more or less than their original cost. All returns assume reinvestment of dividends and capital gains. Current performance may be lower or higher than that shown. Refer to Investment Management & Financial Services | BlackRock for most recent month-end performance. Investment returns reflect total fund operating expenses, net of all fees, waivers and/or expense reimbursements. Index performance is shown for illustrative purposes only. It is not possible to invest directly in an unmanaged index. Share classes have different sales charges, fees and other features. Returns with sales charge reflect deduction of current maximum initial sales charge of 5.25% for Investor A shares. Institutional shares have no front- or back-end load. Institutional shares have limited availability and may be purchased at various minimums. See prospectus for details. Net Expenses Excluding Investment Related Expenses for Institutional shares: 0.84%; for Investor A shares: 1.13%.
The fund posted returns of 0.35% (Institutional shares) and 0.28% (Investor A shares, without sales charge) for the second quarter of 2024 while the BofA ML 3-Month T-Bill returned 1.32%. The fund's positive relative performance was driven by a directional long position in equities and a directional short exposure to bonds, as well as relative-value positioning in equity countries. The fund was positioned long on equities in the United States and Europe, and short on fixed income (primarily in the United States and Japan). It held long equity exposures to Italy, Japan, and Taiwan versus short positions in Korea, Australia, and France. The fund had a long position in German government bonds versus a short exposure to U.S. Treasuries.
Short duration(interest rate sensitivity) positions in the United States, Germany, and Japan contributed due to robust global activity data, particularly in April. Currency positioning, notably a short exposure to the U.S. dollar versus a long position in the Australian dollar, was beneficial due to weaker growth and labor data in the United States, which caused the U.S. dollar to weaken. Contributions from relative-value equity positioning were driven by a long position in Taiwan versus short exposures to France and Korea. A long position in U.S. large-cap equities was also beneficial.
The fund's relative-value bond positioning detracted from returns, driven by long positions in Mexico and Brazil versus short exposures to Thailand and South Africa. Elections in South Africa and Mexico resulted in bond moves that detracted from returns. In developed markets, a long position in German bunds versus short exposures to Canadian bonds and U.S. Treasuries was also unhelpful.
The early part of 2024 provided a rich opportunity set for macroeconomic investors as data unfolded in a manner that was clearly different to the pessimistic growth outlook priced into markets. The fund positioned for a global reflation and a broadening of the U.S. growth impulse to Europe through long equity and short duration positioning. We took some profits on long equity and short duration positions, accounting for more appropriate market pricing of accelerating global growth. Given the likelihood of greater volatility around elections, we have slightly reduced directional risk and have continued to seek relative-value opportunities across equities, sovereign bonds, and foreign exchange. The fiscal backdrop in the United States continues to deteriorate. We still believe that policymakers will ultimately prioritize sustaining fiscal activism over returning inflation to target, which should be a tailwind to our broadly reflationary positioning, and challenging for the U.S. dollar.
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