| NEW YORK, April 13
NEW YORK, April 13 One of the portfolio managers
behind BlackRock Inc's largest mutual fund says his team
has been buying safe-haven assets such as gold and Treasuries to
protect from "known unknowns" in global politics.
"There is a little political risk creeping back into
investors' awareness and that's probably appropriate because
there are some things out there that can go wrong," Russ
Koesterich, a manager of the $40 billion BlackRock Global
Allocation Fund, told Reuters on Thursday.
"We've been raising our allocation to U.S. duration and
we've been raising our allocation to gold."
Despite what he said was a "good year" for markets and a low
likelihood of recession, Koesterich said there is "less
conviction" in the "reflation trade," the belief that markets
are poised to profit from a coming global growth wave.
Koesterich and other investors saw that reflation narrative
driving stocks' strong performance since Donald Trump's election
last November as U.S. president.
"Against the dry tinder of firming prices, we now have a
potential match: a rare combination of fiscal stimulus and tax
cuts," Koesterich wrote in November. "Welcome to the new world."
The match has not yet been struck, and the unpredictability
of conflict involving the Korean peninsula is dragging on
markets, Koesterich said.
Reclusive North Korea could soon conduct its sixth nuclear
test or more missile launches in defiance of U.N. sanctions and
warnings from the United States that a policy of patience is
"I don't think anybody is going to predict what happens in
North Korea," said Koesterich. "That's one of those known
Gold and bonds are traditionally used to curtail risk. But
the U.S. dollar is more likely to trade within a tight range,
rather than "rocket" higher, Koesterich said, especially after
Trump told the Wall Street Journal this week that the greenback
is "getting too strong."
The Global Allocation Fund trimmed its quarter-billion
dollar stake in JPMorgan Chase & Co in March, according
to new disclosures showing the bank was no longer one of the
fund's top-10 holdings at the end of the month.
JPMorgan and other bank stocks faced selling pressure on
Thursday after their earnings reports showed slower loan growth
and other comments by Trump on Wednesday endorsing low interest
rates. Low interest rates dampen a bank's ability to make money
The latest disclosures did not clarify how much of the
JPMorgan stake has been sold and Koesterich declined to comment
on individual stocks.
(Reporting by Trevor Hunnicutt; Editing by Jennifer Ablan)