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BlackRock to close government securities fund

BlackRock plans to close its 29-year old government securities fund and merge its assets into the UK gilts all stocks tracker fund.

In letters to clients it says the £43m actively-managed vehicle is too small to manage effectively but the tracker fund has £680m under management.  

The move would leave BlackRock with just two UK-based retail bond funds with active managers.

Paul Shuttleworth is to remain at the group after the closure.

BlackRock government securites has returned 26.7 per cent over the past five years, slightly above the IMA UK gilt sector average 26 per cent return.

Managing director Tony Stenning says in the letters: “We have not taken this decision lightly. As there are some external fixed costs associated with managing funds, for example the auditor’s fees, the merger of the funds would result in a larger fund which would have the advantage of diluting these costs across more unitholders.”

The group has asked clients to approve the closure at a unitholder meeting on October 13. If the proposals pass then dealing in the fund will be suspended on October 21 and the merger will take place on October 23.

The plans would see the investors’ annual management charges fall from 1 per cent in the active vehicle to just 0.45 per cent in the passive fund.

They come after reports that BlackRock is to launch a strategic bond fund, which would join the existing corporate bond fund and global bond fund in its UK-based retail range.

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