Fund Profile

BlackRock Sustainable American Income 12 June 2019

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by BlackRock Sustainable American Income. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

BlackRock North American Income Trust aims to provide an attractive and growing level of income, with capital appreciation over the long term.

The managers, Tony DeSpirito (lead manager), Franco Tapia (co-manager) and David Zhao (co-manager), utilise a bottom up stock specific approach to managing the portfolio. The team starts with a universe of the 500 largest US companies by market cap, searching for attractively valued, high quality companies with histories of dividend growth. Currently the portfolio is made up of just 81 holdings. Illustrating the valuation led approach, the average company in the portfolio has a P/E of 13.8x, relative to the average in the benchmark Russell 1000 Value Index of 14.5x.

Since Tony DeSpirito took the helm of the portfolio towards the end of 2014, the trust has seen a marked improvement in performance. Over three years (to the end of May 2019) the trust has generated 47.2% in NAV returns, outperforming the Russell 1000 Value Index (42.2%) and only narrowly trailing the average trust in the AIC North American sector (53.4%). The trust has now outperformed the benchmark in three of the past five calendar years. This has been achieved with lower levels of volatility and over the past year the trust has the second lowest beta of the two AIC North American sectors, sitting at just 0.82.

Alongside the potential for capital appreciation, one of the key draws for investors is the robust income, with the shares currently yielding 4.5%. The dividend saw a dramatic increase last year, when the board increased its dividend by 61.6% to 8p per share. Part of this is paid from capital reserves, but is also supplemented through option writing, headed by the BlackRock Equity Derivatives option team in Boston.

The strong performance, defensive characteristics and now very significant dividend yield have had a clear impact on demand for the shares. The discount has narrowed and the trust currently trades at a premium of 2.8%.

Kepler View

BlackRock North American Income has been a real turnaround story over the past five years. Having struggled in the first few years of the trust’s life, the new team has come into their own and demonstrated that it is possible to generate capital appreciation and income through quality and valuation driven research, in a growth orientated North American setting.

In the current volatile environment the trust appears a stand out candidate for more cautious investors. Over the past year the trust has the second lowest beta of the two AIC North American sectors and over five years the beta is just 0.9, relative to the average of 1.03 across both the AIC North American sectors. Looking at the annualised standard deviation, the trust boasts the lowest volatility in the two sectors over both one (16.3%) and five years (10.4%), where the average is 23.3% and 14.0% respectively.

As such, given the uncertain environment for US equities, we are not surprised that the trust has started trading on a premium, and believe that should the trust slip to the slightest discount it would present an attractive entry point for investors.

BULL
BEAR
Strong track record of delivering total returns
Trading at a premium
Now yielding 4.5%, with the Board having increased the dividend by over 60% last year
Current uncertainty surrounding US market conditions
Low levels of volatility are ideal for the current uncertain environment

Continue to Portfolio
2022 Kepler Income & Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for income & growth... Find out more

Fund History

13 May 2022 Time to reappraise the ‘value’ approach?
After a tough decade, the environment for the value approach is improving, says Lisa Yang, Co-Manager of the BlackRock Sustainable American Income Trust plc. Is it time for investors to take note?
27 Apr 2022 Finding value in a haystack
Non-income value strategies are becoming increasingly scarce, but the holdouts represent attractive near-term opportunities…
25 Mar 2022 Slides and Audio: BlackRock Sustainable American Income
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 15 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
23 Feb 2022 Regime change
Ahead of our spring conference, we ask whether investors need to junk their portfolios and start again…
17 Feb 2022 Results analysis: BlackRock Sustainable American Income
Reporting results for the year ending 31 October 2021, BRSA has succeeded in combining sustainable investing with an outperforming value-stock bias…
15 Dec 2021 Fund Analysis
BRSA’s new sustainable approach to US value investing represents a highly distinct strategy…
08 Dec 2021 We are the (ESG) champions
Investment trusts tend to be amongst the best-performing ESG strategies in the combined open- and closed-ended universe…
24 Nov 2021 Holding back the tears
While the final text of COP26 fell short of what many had hoped for, the writing is on the wall for fossil fuels and, from an investment perspective, the age of sustainability has only just begun…
17 Nov 2021 How Do You Like Them Apples
Judging whether the US market is expensive is not as easy as many make it out to be…
03 Nov 2021 Don't fear the reaper
With market direction hard to call, we consider the case for taking a long-term view in the investment trust sector…
20 Oct 2021 Board games
Investment trust boards talk a good game about championing shareholders interests - but do they really deliver?
28 Jul 2021 How are the mighty fallen
Dividend culture as we knew it is dead, according to Kepler's David Johnson, but investment trusts offer a solution...
20 Jul 2021 Fund Analysis
Proposed shifts in BRNA’s strategy towards sustainable investing may improve its return profile and be the catalyst for a narrowing discount….
22 Apr 2021 FAANGs for the memories
The massive outperformance of mega-cap tech last year could become a thing of the past if anti-trust legislation and negative sentiment starts to bite...
12 Feb 2021 Results analysis: BlackRock North American Income
With a strong start to the year, BRNA has a number of catalysts to drive performance in 2021 and an attractive yield of 4.7%...
07 Jan 2021 Fund Analysis
BRNA offers a disciplined US value opportunity with superior income attributes…
19 Nov 2020 Hope springs eternal
The US election has given long-suffering value investors new hope of a 'great rotation' in their favour, but that light at the end of the tunnel could in fact be a train…
01 Oct 2020 Alternatives for Income Investors
Slides and audio from our event focused on alternative routes to a reliable income…
30 Sep 2020 Slides and Audio: BlackRock North American Income
View the presentation and listen to the audio from our 'Alternatives for Income Investors' event on 29 September...
20 Aug 2020 Alternatives for income investors
In a world where dividend are under unprecedented pressure, our income focused online event in September should provide serious food for thought…
09 Jul 2020 Fund Analysis
BRNA offers a 5% yield from a portfolio of high quality US companies…
18 Jun 2020 Gimme shelter
As income investors brace for impact we ask which regions and trusts are less likely to cut their dividends in 2020…
27 Apr 2020 What does defensive investing mean today?
As investors reflect on the damage inflicted by the coronavirus outbreak on their portfolios in recent weeks, they may be looking for a way to build in greater resilience... However, traditional defensive investment strategies may not be the answer...
13 Feb 2020 Choose your own adventure
Predicting the future is impossible, but identifying which trends have coincided in the past can give us clues about what may be to come...
31 Dec 2019 Fund Analysis
Since a management change in 2014, BRNA has been one of the great turnaround stories...
12 Dec 2019 Regime change: how manager changes impact performance
Does a change in manager result in improved trust performance?
25 Sep 2019 Where next for the US stock market?
12 Jun 2019 Fund Analysis
In the current volatile environment, this trust appears a stand out candidate for more cautious investors...
13 Nov 2018 Appetite for disruption
How new technology is driving dividends...
31 Oct 2018 The Trump effect
Two years after the shock election of Donald Trump, we take a look at what the Trump administration has really meant for US markets and the trusts that invest in them...
31 Oct 2018 Fund Analysis
A diversified portfolio comprised mainly of US equities, BRNA produced almost double the return in NAV terms of the Russell 1000 Value index in 2017, and has comfortably outperformed the benchmark so far in 2018...
26 Apr 2018 The $23.9 trillion dollar question*
Are US equities, which have hit record highs on 71 occasions in the last 12 months, overpriced or are they actually trading at a price worth paying?
26 Apr 2018 Fund Analysis
A large cap portfolio, focused on high quality companies, positioned for an inflationary environment with significant exposure to banks
12 Jan 2018 Fund Analysis
A large cap portfolio, focused on high quality companies, positioned for an inflationary environment with significant exposure to banks...
23 May 2017 Fund Analysis
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