Seeking diversified bond returns with BlackRock Fixed Income Global Opportunities

• BlackRock Fixed Income Global Opportunities is a benchmark-agnostic strategy that invests across global rates, credit, emerging markets and securitised assets.
• Its moderate duration profile reduces reliance on falling interest rates while providing stable income.
• Around 75% of assets are investment-grade, complemented by selective higher-yielding credit exposure.
• Its historical track record shows steady performance over time, coupled with lower volatility, smaller drawdowns and less sensitivity to the overall bond market.
• There are multiple share classes available, offering accumulating and distributing options across USD and hedged currencies.

Beyond the benchmark: A flexible strategy with a clear plan

The BlackRock Fixed Income Global Opportunities Fund, or FIGO, seeks to maximise total returns through income and capital growth by investing across global bond markets. As at end-June 2026, FIGO managed approximately US$9.4 billion across more than 4,100 holdings, supported by 5 lead portfolio managers, and specialist teams across 12 sector areas.

BlackRock FIGO is benchmark-agnostic in portfolio construction. The Bloomberg Global Aggregate Index is used only as a performance comparator; strictly speaking, the fund has no formal benchmark. This allows the managers to allocate across global bond markets based on where they find the best risk-adjusted opportunities, subject to regulatory and internal limits.

Despite this broad mandate, the fund is straightforward in nature – it remains fundamentally a multi-sector bond fund. Returns are primarily driven by income, interest rate and credit positioning, sector allocation and security selection. Derivatives may be used to implement ideas and manage risks efficiently, but structural leverage is not a core return driver.

The fund can maintain duration between -2 and 7 years, although it has typically operated from 0 to 4 years. At end-June 2026, duration was around three years, compared with more than six years for the Bloomberg Global Aggregate Index. This lower reliance on duration is complemented by exposure across global rates, corporate credit, emerging-market debt and securitised assets.

BlackRock FIGO combines top-down market views with bottom-up investment research. The lead managers assess factors such as inflation, monetary policy, credit conditions and valuations before deciding which parts of the bond market offer the best balance of risk and return. BlackRock’s specialist teams then research and select individual securities, while the portfolio is adjusted as market conditions and valuations change.

How FIGO is positioned today

(Unless otherwise stated, figures are in USD terms, and for unhedged share classes (e.g. A2 USD) for BlackRock FIGO. While the fund was incepted in 2007, the fund’s current flexible investment process was changed in May – June 2013.)

1. Steady income, without relying on a fall in interest rates

BlackRock FIGO currently offers an attractive level of portfolio income without requiring a sharp decline in interest rates. As of end-June 2026, the fund had a yield to worst of 5.49% and duration of 3.25 years – this compares with the Bloomberg Global Aggregate Index’s lower yield of closer to 3.83% and higher duration of around 6.15 years.

The fund therefore offers a higher starting yield while carrying roughly half of the index’s interest rate sensitivity. This should make the fund less affected by changes in sovereign bond yields than the index, while its underlying income provides a meaningful starting point for returns if yields remain broadly stable. The fund can still benefit if interest rates decline, but its investment case does not depend on a large bond-market rally.

The fund managers also identify multiple potential sources of excess returns beyond anticipating the direction of interest rates – this includes active sector rotation and security selection. Alongside active duration management, the team shifts capital between government bonds, corporate credit, emerging markets and securitised assets as their relative attractiveness changes. Individual securities are selected based on factors like income, credit fundamentals, liquidity, and downside risk.

For example, the fund increased global investment-grade credit in early 2024 as the managers expected spreads to tighten, before reducing the allocation later that year amid higher volatility and favouring high yield and emerging-market rates on the back of stronger growth. In 2025, the fund added emerging-market local-currency debt for its attractive carry, increased higher-quality high yield early in the year before trimming as valuations tightened, and raised agency mortgage exposure when spreads widened to capture additional income.

To be clear, FIGO is not totally immune to changes in market conditions. Its lower duration reduces but does not fully remove potential pressures if yields rise over a prolonged period. Additionally, its spread-duration of 4.76 years (versus portfolio duration of 3.25 years) reflects some sensitivity to widening spreads across different asset types, due to its exposures to non-government bonds including corporate and securitised credit. Nonetheless, we believe the fund remains diversified across different sources of return with a solid long-term track record, as we will elaborate on in the next sections.

2. Diversified yield across different geographies and asset types

FIGO seeks returns across the full spectrum of global fixed income, rather than depending heavily on a single country or asset type. As of end-June 2026, the portfolio combined securitised assets, government bonds, corporate credit, and emerging market (EM) debt (Table 1). Its geographical exposure extends well beyond the US – we estimate non-US exposure represents about 39% of the fund (excluding undisclosed non-US exposures) (Chart 1).

This breadth gives FIGO many potential sources of excess returns and carry. Securitised assets and MBS derive income from diversified pools of loans; government bonds provide direct exposure to interest rate cycles across different economies; corporate bonds provide additional carry through credit spreads; EM positions may offer higher local-currency yields alongside selected currency exposure. Importantly, this reduces the fund’s dependence on any single macroeconomic outcome, and supports its objective of a low correlation with broader fixed income markets. BlackRock’s cumulative gross attribution since May 2013 shows that returns have come from numerous sectors and strategies: the largest individual contributor (European credit) represented only about 15% of total attributable returns. We also show a yearly breakdown of return attributions from 2023 (Chart 2).

As of end-June 2026, the current portfolio nonetheless has a clear emphasis on securitised assets (32%) and US agency MBS (20%). We reiterate that the fund remains unconstrained with exposures directly reflecting the managers’ views. Securitised exposure has increased from just 16% in early 2023 to 32% currently. Furthermore, since May 2013, agency MBS exposure has ranged from approximately -15% to 35%; investment-grade credit has ranged from 0% to 40+%; high-yield bonds have ranged from 0% to 20+%, and EM debt has ranged from 0% to 30%. The large range of outcomes demonstrates that FIGO does not have a permanent asset mix – today’s allocation reflects the fund’s flexible mandate and the managers’ beliefs at that point in time.

Table 1: Fund is diversified across different sectors

Chart 1: Fund is also diversified across geographies, including ~40% into non-US fixed income

Chart 2: Multiple sectors have contributed to returns since 2023

3. A quality investment-grade core, complemented by selective credit exposure

Despite its flexible mandate, BlackRock FIGO maintains a relatively strong credit-quality foundation. As at end-June 2026, the portfolio’s average credit quality was around A / A-. Around 75% of its assets were rated investment-grade, including 17% in AAA-rated securities and 29% in AA-rated securities (Chart 3) – these likely reflect its significant positions in DM sovereigns as well as various securitised assets (including agency MBS).

This is complemented with selective exposure to higher-yielding areas, though its holdings are tilted toward the higher-quality BB segment (14%) rather than the more speculative CCC segment (4%). These positions can increase underlying portfolio income and provide opportunities for capital gains (e.g. if fundamentals strengthen and/or credit ratings improve).

FIGO therefore sits between a conventional investment-grade fund and a more aggressive multi-sector income strategy. Its higher-quality core provides some resilience, while selective lower-rated exposure lifts carry and return potential.

Chart 3: High-quality portfolio, with 75% rated investment-grade

Track record: Solid over the years, strength lies in strong downside risk management

BlackRock FIGO’s performance has remained solid since it pivoted to its current multi-sector approach in June 2013 (Table 2). As of 23 July 2026, the fund delivered annualised returns of 5.8% over 3 years, and 2.4% over 5 years. It has generally outperformed the Bloomberg Global Aggregate Index over different time periods, especially recently over the 3-year and 5-year horizons. It has also outperformed a composite of peers over different time periods.

Importantly, these outperformances were accompanied by lower drawdowns and volatilities versus both the benchmark and peer composite. Since 2013, the fund has experienced just 3 periods with drawdowns of over 3%: (i) in 2015-2016 amid weakness in European bond markets and a growth slowdown in China; (ii) in 2020 due to the COVID shock; and (iii) in 2021 – 2024 amid the global monetary-tightening cycle. Notably, FIGO delivered a comparatively resilient performance compared to peers and the benchmark in the recent global hiking cycle, as observed via the respective 5-year drawdown metrics in Table 2.

Risk statistics in Table 2 further differentiate FIGO from a conventional bond portfolio. This includes its lower volatility metrics (actual volatility and downside volatility) versus the Bloomberg Global Aggregate Index. In addition, the team shared that (as of June 2026) its correlation with the index was 0.59 with a beta of 0.56; its correlation with US Treasuries was even lower at 0.36 (beta = 0.42). For investors, this suggests FIGO may provide additional diversification within fixed income by reducing reliance on the duration-heavy risks that drive conventional bond indices.

Table 2: Fund metrics compare favourably against index and peers

Chart 4: 3 main drawdowns since strategy shift in 2013, coinciding with major market moves

Conclusion: A flexible bond fund for investors seeking diversified sources of income

To summarise, we think the BlackRock Fixed Income Global Opportunities fund offers a differentiated and diversified approach to global fixed income. Unlike a traditional bond index, this fund combines moderate interest rate (duration) exposure with allocations across government and corporate bonds, as well as securitised assets. Its portfolio today combines a strong investment-grade foundation with selective exposure to higher-yielding sectors, and its track record shows a generally resilient strategy versus both the benchmark and peers.

BlackRock FIGO best suits investors seeking a flexible and actively managed bond allocation with lower interest rate sensitivity, given its duration exposure of just 3.25 years. It is certainly not a substitute for cash as it can still see occasional periods of NAV declines, but otherwise aims to deliver stronger returns than cash without taking on too much volatility.

The fund is currently available in multiple share classes, covering A2 (accumulating), A5 (quarterly distributing), A6 (monthly distributing with smoothing), and A8 (monthly distributing with smoothing, accounting for hedging costs). Currency classes vary by share class, covering unhedged versions in USD, as well as hedged versions in SGD-H, EUR-H, GBP-H, and AUD-H.

At the time of writing, the annualised distribution rates for the funds were as follows: 3.8% for A5 SGD-H, 4.9% for A6 USD, and 4.1% for A8 SGD-H. All share classes mentioned above are available for subscription via Cash and SRS. 

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold NIL positions in the abovementioned securities. This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.