BlackRock Cash breezes through crisis

Looking at returns on an annual basis, the fund has not made a negative return over the last five years, and in 2008, as the FTSE All-Share plunged more than 30 per cent and most other assets made losses, BlackRock Cash Fund returned 4 per cent.

The fund aims for a high rate of interest from cash, cash deposits and other money market instruments, but its choice of investments is more conservative than some money market funds. Its core strategy is to maintain high levels of liquidity, while investing in top bank instruments from an approved list its management team draws up. The fund's manager, Stuart Niman, prefers floating-rate securities with maturities under a year issued by very high quality top-tier banks to enhance the fund's defensive qualities.

Due to the volatility in continental Europe, the fund has diversified its holdings by adding to UK government-guaranteed floating-rate debt, such that around 22 per cent of the fund's assets are now in UK government-guaranteed debt. The portfolio is positioned away from the sovereign and bank sectors of those eurozone countries with structural deficit problems.

Between March and June, the fund mostly maintained liquidity around 20 per cent and targeted maturities of under one month, which account for between 40 per cent and 50 per cent of assets. BlackRock says this is an effective way of downplaying bank credit risk when nominal yields are low.

Source: Morningstar, *BlackRock.

Performance data as at 30 June 2011.

Top 10 holdings as at 30 June 2011

Sector breakdown