Bestinvest says
The barbell strategy frees manager Nick McLeod-Clarke to buy companies not often found in income portfolios and reduces exposure to the predictable names found in many rival funds. He also prizes flexibility, something that enabled him to turn over large parts of the portfolio in 2008 and 2009 to exploit changing market conditions. Together these factors have led to strong outperformance over his career, whilst he has also delivered on the fund’s income objective. He benefits from the backing of a strong UK team at BlackRock, though investors should be wary of holding this fund in conjunction with their other UK funds due to stock overlaps.
The portfolio is selected almost entirely from the FTSE 350 index. The manager employs a 'barbell' approach, splitting the portfolio into two contrasting types of company. One part is invested in companies producing a high dividend and is managed with a low turnover. Bonds may also be included in this part of the portfolio. The remainder of the fund targets fast growing companies and is managed on a more active basis. There is no yield requirement for this part of the portfolio, though overall the fund targets a yield 10% above that of the FTSE All Share.
70% of the portfolio is selected from the recommendations of BlackRock’s UK equity team. The team follow a 3-stage process, evaluating the business itself, the quality of its management and finally whether the shares are good value. The remaining 30% is at the discretion of the fund manager, who is able to feed off the ideas of other research teams within BlackRock, and also to choose companies whose shares are not liquid enough to be used by the wider UK team. The manager places great emphasis on flexibility, and has at times changed his portfolio rapidly to reflect a changing market outlook.