3 BlackRock Mutual Funds to Buy on the Fed's Rate-Cut Delay

Zacks Equity Research
·4-min read

The Federal Reserve has not yet committed to a timeline for rate cuts in 2024 and suggested that it would study economic data further before bringing in a policy change as definitive as that. Currently, market participants are expecting the first rate cut from the Federal Reserve to be in September. While the recent jobs data has been soft, inflation has continued to be stubborn. With April inflation numbers due later this week, all eyes will be on how the central bank reacts to them.

However, the financial sector has thrived over the past 12 months, with the Fed continuing to keep the rate “higher for longer.” The Financial Select Sector SPDR (XLF) has grown 7.7% year to date and 23.9% over the 12-month period ending on Apr 30, 2024. In this environment, BlackRock Inc. BLK, one of the world’s largest asset managers, is poised to do well.

BlackRock was founded in 1988. Based in New York City, the company offers investment, advisory and risk management solutions in various asset classes like equity, fixed income, cash management, alternative investment and real estate. It has more than 19,000 employees and is present in more than 36 countries.

BlackRock reported that it had $10.5 trillion worth of assets under management as of Mar 31, 2024, as it beat earnings estimates for the first quarter. BLK reported adjusted earnings of $9.81 per share, surpassing the Zacks Consensus Estimate of $9.42.

BLK’s continued efforts to strengthen the iShares and ETF operations and restructure its actively managed equity business are expected to aid the company's growth. Also, recently, BlackRock has entered into an agreement with Global Infrastructure Partners to acquire the leading global independent infrastructure manager for $3 billion in cash and approximately 12 million BLK shares.

BLK’s exploits in the crypto scene have also been noteworthy. With the SEC finally allowing spot Bitcoin ETFs to go mainstream in January, BlackRock has emerged as one of the most prominent holders of bitcoins. BLK’s spot bitcoin ETF has garnered $16.7 billion of assets since its launch in January, putting it less than $1 billion behind market leader Grayscale.

Hence, investing in BlackRock mutual funds may provide the much-required stability and growth potential in a market that is expected to do well in the coming months. Astute investors should consider such funds at present. Mutual funds, in general, reduce transaction costs and diversify portfolios without an array of commission charges that are mostly associated with stock purchases (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

We have thus selected three mutual funds that boast a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), have positive three-year and five-year annualized returns and minimum initial investments within $5000, as well as carry a low expense ratio.

BlackRock Tactical Opportunities Investor PCBAX seeks long-term capital appreciation by using a macro asset allocation strategy, investing different percentages of its portfolio in global stocks, bonds, money market instruments, cash and foreign currencies. The advisor may choose to invest in common stock, preferred stock and depositary receipts.

Richard Murrall has been the lead manager of PCBAX since May 2017. The three top holdings for PCBAX are Microsoft (4%), Apple (3.6%) and Amazon (2%).

PCBAX’s 3-year and 5-year annualized returns are 5.1% and 4.5%, respectively, and its net expense ratio is 1.07%. PCBAX has a Zacks Mutual Fund Rank #1. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

BlackRock International Dividend Investor BREAX invests the majority of its net assets in dividend-paying equity securities issued by foreign companies of any market capitalization and derivatives that have similar economic characteristics. It also invests in global fixed-income securities.

Olivia Treharne has been the lead manager of BREAX since February 2020. The three top holdings for BREAX are Taiwan Semiconductors (4.8%), Novo Nordisk (4.4%) and ASML Holdings (4%).

BREAX’s 3-year and 5-year annualized returns are 3.6% and 6.9%, respectively, and its net expense ratio is 0.92%. BREAX has a Zacks Mutual Fund Rank #1.

BlackRock Large Cap Focus Value MRBVX seeks capital appreciation along with current income by investing most of its assets in large-cap equity securities and derivatives that have similar economic characteristics to such securities. MRBVX advisors primarily choose to invest in equity securities of undervalued companies.

Tony DeSpirito has been the lead manager of MRBVX since November 2019. The three top holdings for MRBVX are Wells Fargo (3.5%), Citigroup (3.4%) and Kraft Heinz (3%).

MRBVX’s 3-year and 5-year annualized returns are 5.9% and 8.9%, respectively, and its net expense ratio is 1.17%. MRBVX has a Zacks Mutual Fund Rank #1.

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