BlackRock Asset Allocation Portfolio changes name, investment strategy

By Toni Weeks

San Diego, March 14 - The board of trustees of BlackRock Funds approved a proposal on Feb. 28 to amend the investment objective and name of the BlackRock Asset Allocation Portfolio, according to a 497 filing with the Securities and Exchange Commission.

Effective May 15, the fund's name will change to BlackRock Managed Volatility Portfolio.

In addition, the investment objective will change to seek total return. Currently, the fund's objective states that it will seek to maximize total return, consistent with income generation and prudent investment management.

The fund will continue to use an asset allocation strategy that involves investing varying percentages of its portfolio in stocks, bonds and money market instruments with a wide flexibility in the relative weightings of each of the three categories. However, the amended investment strategy will allow the fund to invest a significant portion of its assets in exchange-traded funds and other equity and fixed-income mutual funds managed by BlackRock Advisors, LLC, the fund's San Francisco-based investment adviser.

Furthermore, the fund's investments in non-dollar-denominated bonds, bonds of emerging market issuers and junk bonds, which has been limited to 20% of the fund's fixed-income allocation, will now be unlimited, such that the fund may invest without restriction in equity securities, whether dollar-denominated or non-dollar denominated, of both U.S. and non-U.S. issuers.

The fund may also invest a significant portion of its assets in non-investment-grade securities, and it will expand its potential investments to include, among others, mutual funds, U.S. government or government agency securities, U.S. and non-U.S. real estate investment trusts, structured products, mutual funds and commercial and residential mortgage-backed securities.

Concurrent with the name and strategy change, the fund will change one of the components making up its customized weighted index to the Citigroup World Government Bond Index from the Barclays Capital U.S. Aggregate Bond Index so as to better reflect the fund's increasing global exposure.

Fees will also change on May 15. Miscellaneous other expenses will increase by 0.03% or 0.04%, depending on the share class, and acquired fund fees and expenses will be increased by 0.18% across the board. As a result, the total annual fund operating expenses will be 1.3% for investor A shares, 2.09% for investor B shares, 2.02% for investor C shares and 1.03% for institutional shares. Previously, the total fees were 1.21%, 2.01%, 1.94% and 0.91%, respectively.

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