The BlackRock Global Funds European High Yield Bond Fund will invest in sub-investment grade bonds issued by European companies to seek returns through a combination of capital growth and income. BlackRock said it will also prepare for potential interest rate rises given that high yield bonds are typically less sensitive to rate changes.

BlackRock's head of European fundamental credit, Michael Phelps, will lead the fund along with senior portfolio manager in European fundamental credit, Jose Aguilar, who will serve as co-manager. They will be supported by a team who manage nearly €4 billion ($6.25 billion) in European high yield benchmarked assets.

Benchmarked against the Barclays pan-European high yield 3 per cent issuer constrained index, a minimum of 70 per cent of the fund portfolio will be invested in non-investment grade (below BBB-) bonds, investing across multiple sectors and geographies.

“The world’s major central banks are following very different policy paths and despite some recent – largely localised – yield spikes, yields remain close to historically low levels, forcing income-hungry investors to look beyond traditional sources of fixed income such as investment grade and sovereign bond markets. Following a period of rapid growth and increasing maturity, European high yield is increasingly viewed as an attractive alternative,” said Phelps.

“Furthermore, a resurging European economy is supporting credit quality and creating a flow of compelling high yield opportunities, while default rates have been trending lower and are expected to remain low,” he continued.

BlackRock’s global fixed income business managed $1.42 trillion on behalf of clients as of 30 June.