Mid year outlook market perspectives july 2012 final
Mid-Year OutlookWhat’s in Store for the Second Half of 2012 iShares Market Perspectives | July 2012
iSHARES MARKET PERSPECTIVES  Despite another episode of intense but fleetingExecutive Summary euphoria earlier in the year, at mid-year the global economy is in roughly the same position as it was six months ago—an anemic recovery threatened by a European crisis. Coming into 2012, our view was that there was an approximately two-thirds probability that the global economy would continue to expand, albeit at a below-trend pace, and a one-third probability that Europe would be the catalyst for another crisis. As of early June, we would stick with those odds. Investors can take some comfort in the fact that the United States is on marginally firmer footing and that emerging market growth should begin to stabilize in the second half of the year as the impact of 2011’s monetary tightening wanes. That said, a number of risks have the potential to cause a global double-dip recession: • Europe remains the major risk. While it appears that a Greek exit is not as imminent as some had feared back in May, the election results do not change the underlying fundamentals. Even if Greece remains in the euro, a bolder plan for tighter fiscal integration is proving frustratingly elusive. • The need to recapitalize the Spanish banking system. This is now probably a bigger threat to the European enterprise than whether or not Greece decides to remain in the euro. Russ Koesterich, Managing Director, • The potential “fiscal cliff” facing the United States in six months, which investors may be iShares Chief Investment Strategist underestimating. Not surprisingly, there has been no progress to date on addressing either the long-term fiscal imbalances or the massive, pending fiscal drag facing the United States in January. Given the soft recovery, if current policy is not altered, the risk of a US double-dip recession rises. As of this writing, while the subject is much debated, investor behavior suggests that this risk is not currently discounted into asset prices. In light of these realities, we believe investors are in for a rocky road and volatility will remain elevated. We would still continue to advocate for a relatively conservative portfolio composed of high-dividend paying stocks—including in emerging markets—and US spread products, such as investment grade and municipal bonds.
iSHARES MARKET PERSPECTIVES Summer Reruns What is interesting is how narrow the differences among asset classes have been year-to-date: most are close to where theyA specter is haunting Europe… started the year, with few producing better than mid-single—Karl Marx digit returns.Marx was referring to communism, not the dissolution of the While the general economic and market environments have beenEuropean Union, but the language could apply in the current broadly in line with our outlook, we have made at least oneenvironment. At the end of our 2012 outlook piece (see January mid-course correction. The ever-present threat in Europe, coupledMarket Perspectives), we suggested that this was likely to be with what looked like investor complacency—no amount ofanother year in which financial market fortunes would be largely rationalization justified the VIX Index in the mid-teens as recentlydriven by the effectiveness, or lack thereof, of policy makers. As of as early May—caused us to adopt a more defensive posture inthe end of May, the jury is still out as to whether the European mid-April. At the time, we suggested that financial volatility wasUnion can summon the necessary political will to address the likely to rise, and equity markets were facing a correction.euro’s structural flaws. Against that backdrop, with the market already experiencingDespite positive growth in the United States and a few tentative a 10% correction, what are our expectations for the remaindersigns of a soft landing in China, Europe continues to represent a of the year?significant threat to the global economy. As was the case in 2010and 2011, marginal improvements in the global economy have Economic Outlook: 2% Growth Ad Infinitum?been overshadowed by the threat of a disorderly Greek defaultand broader fears regarding the solvency and longevity of the Absent a crisis in Europe, we would continue to expect economicentire European Economic and Monetary Union. growth in the second half of 2012 to be broadly in line with the first quarter—positive but subpar. In the United States thatWhile the early months of 2012 looked better than expected and suggests growth of around 2%, while global growth should berecent ones worse, so far 2012 has played broadly to the scenarios roughly 3% to 3.5%.we laid out in our 2012 outlook. The US and global economies havechugged along at a positive, but uninspiring rate. Europe has, as In the United States, our preferred measure of economicwas expected, been a drag on global growth—with the weakness activity—the Chicago Fed National Activity Index (CFNAI)—disproportionately evident in the south. Inflation has remained remains in the same range that has defined it since 2009. Themuted, and while rates hit a new low in early June, they have spent CFNAI has been an exceptionally reliable indicator, historicallymost of the first half of the year stuck in the same range that has explaining roughly 45% of the variation in next quarter’s GDP. Itbroadly defined the bond market since last September. has kept us relatively measured in our expectations for economic growth through both the pathos of last summer and the prema-In terms of financial markets, our expectation for 2012 was for a ture euphoria of earlier this year. Despite all the gyrations indecent but uninspiring year for stocks, which we expected to at sentiment, the CFNAI continues to oscillate somewhere aroundleast outperform bonds. Within equities, we favored dividend- zero, which is consistent with GDP growth of 2% or slightly betterpaying mega capitalization stocks (mega caps), smaller devel- (see Figure 1). In the absence of an exogenous shock—Europeoped countries and emerging markets. In fixed income, we being the most likely, but not the only candidate—we wouldexpected interest rates to remain contained, but for municipal continue to expect the United States to grow at around 2% forand investment grade bonds to outperform. the remainder of 2012 and into 2013.On the whole, performance year-to-date has generally conformed to Similar to the CFNAI, we find that the Global Purchasing Manag-that view, with the notable exception of emerging markets. Equities ers Index (PMI) provides a reasonably accurate read of near-termare narrowly beating bonds and mega caps have outperformed both global economic activity. Here we see the same picture as in thesmall and large caps. The one call which has not had much of an United States with the indicator suggesting that global growth isimpact to date is our preference for emerging markets. Year-to-date, unlikely to collapse or accelerate in the near term. The GlobalEM equities have performed in-line with those in developed markets. PMI ended April at 52.2, well above its levels in 2008, early 2009 and last summer and indicative of growth, but down from theOn the bond side, we started the year with a particular focus on more robust levels of earlier in the year (see Figure 2). Absent aUS investment grade debt and a continued preference for high collapse in Europe, the global economy should be able to limpgrade municipals. So far, performance has been broadly in line along for the remainder of the year.with our comments, with both investment grade and municipalsoutperforming broader bond indices.
iSHARES MARKET PERSPECTIVES  Even in China, the picture remains remarkably similar. Growth The ongoing global economic sluggishness begs a question: why is disappointed in the first quarter and is likely to be soft again in growth so weak nearly three years after the end of such a brutal the second quarter; however, Chinese leading indicators suggest recession, and how long is it likely to remain stuck in first gear? slow growth, but no meaningful deceleration. Leaving aside the risk associated with the European chaos, the US fiscal drag or higher oil prices, the answer is that the same While the data out of China has been decidedly mixed and headwinds that have inhibited the recovery since 2009 remain difficult to interpret, our best guess is that China engineers a broadly in place. Debt levels in the developed world are still too soft landing in the back half of the year, with growth settling at high and the deleveraging process is likely to continue to exert a around 8%. After all, China has both the motivation and the headwind for the foreseeable future. In the United States, in means to do so. The motivation is the pending leadership particular, consumer debt levels, while lower, are still extremely transition in the fall, for which we believe Chinese officials will high by historical standards, and are unlikely to return to a more take whatever steps necessary to ensure a reasonably smooth sustainable level until probably 2014. transition, including keeping growth at a respectable rate. And as is the case with other emerging market countries—notably In addition, consumers are also struggling with stagnant wage Brazil—China has the fiscal and monetary flexibility to provide growth, which for hourly workers is at a record low, and negative in further stimulus. In the run-up to the transition, we would expect real terms. Even for the broader working population, income growth additional steps, such as cuts in the reserve requirement and is barely keeping pace with inflation. One little-noticed develop- targeted stimulus aimed at consumption, to ensure a soft landing. ment is that personal income growth has decelerated sharply over the past 12 months. Part of the reason for this is the slowdown in government transfer payments—direct payments such as unemployment benefits—which are no longer supporting personal Figure 1: Chicago Fed National Activity Index income growth to the extent they were in 2009 and 2010. In the (2000 to Present) absence of ever-increasing largess from Washington, personal 2 income growth has decelerated from 6% year-over-year in early 1 2011 to barely 3% today (see Figure 3).Chicago Fed National 0 In the first quarter, consumption was supported by a decline in the Activity Index -1 savings rate, which fell from 4.7% at the end of 2011 to 3.8% in -2 March (see Figure 4). This drop in the savings rate helped to propel -3 real personal consumption to a five-quarter high in the first quarter. Given the already low level of personal savings in the United States, -4 we would not expect this tailwind to continue, and believe personal -5 2/00 2/02 2/04 2/06 2/08 2/10 2/12 consumption is likely to be slower for the remainder of the year. Source: Bloomberg, as of 5/15/12. Figure 3: United States Personal Income Growth Figure 2: Global Purchasing Managers Index (2000 to Present) (2004 to Present) 70 10%Global Purchasing Managers 8% Personal Income Growth 60 6% Year-over-Year 4% Index 50 2% 0% 40 -2% -4% 30 -6% 4/04 4/06 4/08 4/10 4/12 1/00 1/02 1/04 1/06 1/08 1/10 3/12 Source: Bloomberg, as of 5/15/12. Source: Bloomberg, as of 5/15/12.
iSHARES MARKET PERSPECTIVES Will the United States Plunge Over the Fiscal Cliff? fiscal drag were to occur, we believe a double-dip recession becomes much more likely. This view has recently been echoed byA major threat to the above scenario of slow but positive growth is, the Congressional Budget Office, which now forecasts a contrac-of course, Europe. Before addressing Europe, it is worth reiterating tion of more than 1% in the first half of next year unless currentthat the United States also poses a significant, though less policy is amended.imminent, threat to the global recovery. The odds still favor an eleventh-hour compromise that is likely toAs has been well reported over the past several months, the United delay part or all of the fiscal drag, but this is by no means assured.States is potentially facing the largest fiscal drag in decades. At the After all, despite widespread views that a compromise would beend of 2012, several tax hikes and spending cuts are scheduled to reached last year, Washington failed to reach a consensus on thehit simultaneously. The cumulative impact will be more than $600 US spending cuts, resulting in the sequester scheduled to takebillion in fiscal drag, or the equivalent of roughly 4% of GDP (see effect next year. Given that the upcoming election is likely to beFigure 5). Given our view that under the current deleveraging trend highly bitter, and may very well increase the partisanship in bothgrowth in the United States is unlikely to be better than 2%, if the the House and Senate, a compromise is not certain. As of this writing, despite all the headlines, we believe that investors are placing a very low probability on the fiscal drag actually occurring. This is partly evidenced by the fact that 2013 growth forecasts Figure 4: United States Personal Savings Rate have remained remarkably stable over the past nine months, (2000 to Present) despite the pending fiscal drag. 10% If in the run-up to the election a continuation of divided govern- ment starts to appear more likely, we believe that the market will come under pressure. At the very least, absent a clear consensus US Personal Savings Rate 8% coming out of the election, November and December are likely to 6% be marked by heightened volatility as investors grapple with the odds of a last-minute compromise. 4% 2% In Europe: Greek Rage, Spanish Banks and German Politics 0% 2/00 2/02 2/04 2/06 2/08 2/10 3/12 While investors enjoyed a temporary lull in early 2012, courtesy of Source: Bloomberg, as of 5/15/12. the European Central Bank’s (ECB’s) massive injection of liquidity, the focus is once again on Europe. The deepening of the Spanish banking crisis and the uncertainty surrounding Greek solvency are just the latest manifestations of Europe’s lingering structuralFigure 5: Cost of Federal Fiscal Policies Set to Expire in 2013 problems. While the second Greek election appears to haveUnder Current Law resulted in a more market-friendly outcome, the country’s fundamentals continue to deteriorate: the economy continues to Dollar Value 2013 Fiscal Policy shrink, banks are still bleeding deposits, and Greece’s debt ($ Billion) burden still appears unsustainable. Emergency Unemployment Insurance –35 Payroll Tax Holiday –110 Going forward, there are three critical developments we’ll be watching. First are events in Greece. Despite New Democracy’s win Bonus Depreciation –64 on June 17 there are still uncertainties regarding Greece’s ability Affordable Care Act (Obamacare) –46 to fulfill its obligations under the March agreement. The coalition Bush Era Tax Cut (Top Bracket) –83 government is likely to attempt to renegotiate the terms of the bailout. Given this scenario, there is still a significant tail risk that Bush Era Tax Cut (Other Brackets) –198 Greece may eventually decide to exit the euro. Should that occur Automatic Spending Cuts (Sequestration) –90 while Europe’s banking issues remain unresolved, this will raise Total –626 the likelihood of a full-blown banking crisis. Even if an agreement can be reached between Greece and the troika it is important toSource: CBO, OMB, Moody’s Analytics, Dismal Scientist 5/15/12 watch the outflows from Greek banks. If the Greek banks continue
iSHARES MARKET PERSPECTIVES  to bleed deposits, the ECB will need to provide more emergency have yet to seize the opportunity to provide a long-term credible assistance to prevent a collapse of the Greek banking system. path. Until then, we believe that Europe will continue to be a source of chronic stress and periodic bouts of risk aversion. If Greece cannot Second, and an even larger threat to Europe, are the Spanish abide by the terms of its austerity package, or if the Spanish banking banks. Spain needs to recapitalize its banking system, which is bailout proves inadequate or unwieldy, then the chronic stress is likely to cost at least €50 billion and perhaps much more. To date, likely to erupt into a crisis. there is no credible plan; investors are still looking for the government to articulate the mechanism by which the banks Given these risks, how should investors consider positioning their would be recapitalized as well as the source of the funds. portfolios going into the back half of 2012? The final development to watch in Europe is how the political Seize the Yield winds blow in Europe’s ultimate creditor—Germany. The Germans are coming under increasing pressure to accept some scheme for One of the consequences of the current environment is investors mutualizing European debt. To date, Chancellor Merkel has been should expect more volatility in the second half of the year. Europe’s in strict opposition to this development. However, if the political lingering fiscal dilemma and the pending drama of the US budget all climate in Germany veers toward a grand coalition between suggest that markets can advance in the second half of the year, but Chancellor Merkel’s Christian Democrats and the opposition the ascent is unlikely to be smooth. Since the early spring, we’ve been Socialists, she may be more inclined to entertain pooling at least expecting more equity market volatility. We believe that markets are some of Europe’s debt obligations. Any development in this likely to remain on edge throughout the remainder of 2012. direction would be a positive for the markets. One potential solution to the present volatility is the equity The net result of this uncertainty is likely to be continued stress dividend play. In addition to the yield story, dividend stocks are in the financial system. Credit spreads have been widening in generally less volatile than the broader market. Since the recent weeks. The pressure on the global financial system is also correction began, dividend-focused indices have generally evident in the Global Financial Stress Index, produced by Bank of outperformed the broader averages. America Merrill Lynch. The indicator recently rose to its highest level since early January (see Figure 6). Recent performance is consistent with the historical pattern. In general, dividend stocks and funds tend to be less volatile than In summary, when we look at the overall investment climate, we the broader averages. The beta (a measure of the tendency of don’t see another recession or a Greek exit as foregone conclusions. securities to move with the market at large) of the Dow Jones U.S. That said, Europe is no closer to a political, economic or financial Select Dividend Index to the S&P 500 Index has historically been resolution to its problems. The ECB’s two long-term refinancing around 0.8, meaning that for every 1% the market moves this operations (LTROs) mitigated, but did not remove, the stress on the index typically moves around 80 basis points. Even in emerging European banking system. While they did buy time for the politicians markets—typically a more volatile sector of the market—divi- to arrive at a political solution to Europe’s debt problems, politicians dend stocks do tend to cushion the downside. The Dow Jones Emerging Markets Select Dividend Index has a beta of roughly 0.8 to the broader MSCI Emerging Markets Index1. In general, dividend stocks and funds have demonstrated muted volatility when compared to broader indices. Figure 6: Global Financial Stress Index (2007 to Present) In addition, many segments of this style are actually trading at a 3 significant discount to the broader global market, particularly outside of the United States. The Dow Jones EPAC Select Divi- 2 dend Index, covering Europe and Asia, is currently trading for lessGFS Index Score than 12x earnings versus a multiple of around 13.5x for the MSCI 1 World Index2. This trend is also evident in emerging markets. The Dow Jones Emerging Markets Select Dividend Index trades at 0 less than 10x earnings versus around 11x for the broader MSCI Emerging Markets Index. 3 -1 2/07 2/08 2/09 2/10 2/11 5/12 1 Source: Bloomberg 4/30/12. 2 Source: Bloomberg 4/30/12. Source Bloomberg, Bank of America Merrill Lynch 5/15/12 3 Source: Bloomberg 4/30/12.
iSHARES MARKET PERSPECTIVES  Emerging Market Stocks have tended to outperform over a one-year horizon whenever the relative valuation is at a 20% or greater discount to developed Our other main view on the equity side balances out the defensive tilt markets. We would therefore view current levels as an attractive implicit in our preference for dividends. As we’ve advocated since late opportunity to add positions, particularly in Latin America, China and last year, we would look to overweight emerging markets. While this Taiwan. As discussed above, we would also have a preference for has not produced positive relative returns year-to-date, we’re sticking gaining our emerging market exposure through high-dividend stocks with the call. and instruments. The argument rests on a number of factors: a longer-term trend Sticking with Investment Grade toward less volatility, stronger economic growth, falling inflation and more compelling valuations. Focusing on the last two, it is worth In the fixed income space, we’ve had a preference for municipal highlighting that emerging market inflation continues to fall, with the bonds since late 2010. This asset class has continued to do well. notable exception of India where we remain underweight. Most of the With municipal yields still at a significant premium to comparable larger emerging markets have witnessed a significant deceleration in Treasuries, and with little evidence of the feared meltdown in inflation over the past six months. In China, inflation has fallen from municipal finances, we would stick with this call. 6.5% in July 2011 to 3.4% in April 2012. In Brazil, a country with a history of struggling with high inflation, inflation has decelerated by The final theme we would emphasize would be our continued more than 2% since September 2011 (see Figure 7). preference for US corporate bonds, particularly investment grades. One of the many ironies of the last several years is, despite the As we’ve discussed in the past, lower inflation in emerging markets is ongoing fiscal deterioration in the US balance sheet and the particularly critical as equity valuations are very sensitive to inflation. continued improvement in corporate profitability, credit spreads As inflation falls, multiples in emerging markets typically rise at a remain high by historical standards. This is particularly true of much faster rate than for a similar drop in developed markets. of the US investment grade space, which largely sat out the risk- driven rally earlier in the year. As a result, while investment grade The potential for multiple expansion is arguably greater given that bonds have narrowly outperformed the Barclays U.S. Aggregate emerging market valuations are currently low by most measures. In Index year-to-date, spreads still appear wide by any measure. late May, the MSCI Emerging Markets Index was trading for less than 11x earnings, the bottom quintile of its historical range. Valuations Currently, the yield spread between Moody’s Baa index and the appear even more compelling when compared to developed markets. 10-year Treasury note is approximately 340 basis points. While Emerging markets are currently trading at a 20% discount to devel- spreads were much wider during the height of the financial crisis, oped markets. In late 2010, emerging market stocks were trading at current levels look exceptionally wide when compared to the 20-year less than a 10% discount (see Figure 8). Historically, emerging markets average of around 230 basis points and even more so against the long-term average of around 185 basis points (see Figure 9). Figure 7: Emerging Market Inflation (2005 to Present) Figure 8: Emerging Market Relative Valuations (2000 to Present) 10% 10% 8%Inﬂation Year-over-Year US Personal Savings Rate 6% 8% 4% 6% 2% 4% 0% 2% -2% -4% 0% 8/05 7/06 7/07 7/08 7/09 7/10 7/11 4/12 2/00 2/02 2/04 2/06 2/08 2/10 3/12 Brazil China Source: Bloomberg 5/24/12 Source: Bloomberg, as of 5/15/12.
iSHARES MARKET PERSPECTIVES It is true that we would expect spreads to be somewhat wider given the In the meantime, we expect volatility to remain elevated, partly due tosluggish nature of the recovery. However, current levels look extreme Europe and partly due to the uncertainty surrounding US fiscal policy.unless you believe the United States is headed back toward another In this environment, while equity markets can move higher, we wouldrecession. Spreads also look exaggerated when you consider the expect that move to be accompanied by a reasonable amount ofongoing profitability of the US corporate sector, as well as the continued volatility, certainly more than we experienced in the first quarter andstrengthening of balance sheets, particularly for large cap companies. As early second quarter. Given that scenario, we would prefer thesuch, we would continue to advocate that investors trade duration for relatively low beta of high dividend stocks—both in developed andcredit risk, with US credit being an attractive place to start. emerging markets—and to use any market weakness as an opportunity to add to longer-term positions in emerging markets. On the fixedConclusion income side, while high yield was the flavor of the month in the first quarter, we believe historically high spreads and less risk favorGive me control of a nation’s money and I care not who makes her laws. investment grade in the coming months.—Mayer Amschel RothschildOver the coming weeks, months and years, Mayer Rothschild’s axiomis likely to be put to the test. While Germany continues to ultimatelycontrol Europe’s checkbook, this may be insufficient in the presenceof rising anger in much of the periphery. If politicians cannot adopt acomplement of pro-growth policies and address Europe’s fragilebanking system, a broader European crisis becomes inevitable.Actions by the ECB at the end of last year and again in February werea powerful palliative, but did nothing to resolve longer-term questionsover Greek solvency, Spanish banks, longer-term growth or fiscalintegration. Based on the market’s recent performance, outside ofsome modest reforms in Spain and Italy, 2012 has been little better.That said, a European crisis is not preordained. Economic solutions doexist, although whether they are politically viable is still an openquestion. Nevertheless, in some respects—a growing awareness of theneed for growth and tentative signs that Germany may accepteurobonds—Europe is stumbling toward a consensus. The big questionis whether they will get there in time. Figure 9: Credit Spreads (1990 to Present) 700Spread MOODY’S Baa Index 600 to 10-Year Treasury (bps) 500 400 Long Term Average 300 200 100 2/90 1/94 1/98 1/02 1/06 1/10 1/12 Source: Bloomberg 5/25/12
iSHARES MARKET PERSPECTIVES Figure 2: iShares Investment Strategy Group Near-Term Outlooks Global Region Underweight Neutral Overweight Related iShares ETF Tickers Developed Markets Global Equities x ACWI, HDV, IOO, OEF, IDV, URTH, ACWV Developed Markets x EFA, IDV, ACWX, EFAV, SCZ Australia x EWA, EPP, EWAS, DVYA Canada x EWC, EWCS France x EWQ Germany x EWG, EWGS Hong Kong x EWH, EWHS Italy x EWI Japan x EWJ, SCJ Netherlands x EWN Norway x ENOR Singapore x EWS, EWSS Spain x EWP Sweden x EWD Switzerland x EWL United Kingdom x EWU, EWUS United States x EUSA, IWV, IVV, USMV Emerging Markets Emerging Markets x EEM, EEMV, DVYE, EEMS Brazil x EWZ, EWZS China x MCHI, ECNS India x INDY, INDA, SMIN Indonesia x EIDO Mexico x EWW Russia x ERUS South Africa x EZA South Korea x EWY Taiwan x EWT Global Sector Underweight Neutral Overweight Related iShares ETF Tickers Consumer Discretionary x Consumer Staples x IYK, KXI, AXSL Energy x IXC, FILL, EMEY, AXEN European Banks x EUFN Financials x IYF, IXG, AXFN, EMFN, EUFN, FEFN, IAT Healthcare x IYH, IXJ, AXHE Industrials x IYJ, EXI, AXID Information Technology x IXN, AXIT, AAIT, IYW, SOXX Materials x IYM, MXI, AXMT, EMMT, RING, PICK, SLVP REITs x ICF, IYR Telecommunications x IXP, AXTE, IYZ US Industrials x IYJ US Regional Banks x IAT US Retail x N/A US Technology x IYW US Utilities x IDU Utilities x IDV, JXI, AXUT Fixed Income Sector Underweight Neutral Overweight Related iShares ETF Tickers Emerging Markets x EMB, LEMB, CEMB, EMHY High Yield Credit x HYG, HYXU, GHYG, QLTB, QLTC LQD, FLOT, QLTA, MONY, ENGN, AMPS, CSJ, Investment Grade Credit x CIU, CFT, CLY, QLTA Mortgage-Backed Securities x MBB, GNMA, CMBS Municipals x SUB, MUB Non-US Developed Markets x ISHG, IGOV TIPS/Global Inflation-Linked x STIP, TIP, GTIP, ITIP US Treasuries x SHY, IEI, IEF, TLH, TLT, GOVT, SHV Global Style Underweight Neutral Overweight Related iShares ETF Tickers Global Mega Caps x OEF, IOO, HDV, DVY, IDV Small Caps x IWMThis material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results. This informationshould not be relied upon by the reader as research, investment advice or a recommendation regarding the iShares Funds or any security in particular. This information is strictly forillustrative and educational purposes and is subject to change. This information does not represent the actual current, past or future holdings or portfolio of any BlackRock client.