BlackRock
Updated 04 Oct 2024
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Disclaimer

This is a non-independent marketing communication commissioned by BlackRock. 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.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Investors have focused on a handful of communication and technology investments1 when investing for growth in the US market. AI technology companies have been an obvious choice at a time when investors were nervous about the outcome for the US economy. But with a soft landing for the US economy increasingly likely, there is evidence that investors are starting to broaden their focus, and look to other, fresher growth themes in the US market.

Emerging opportunities in US healthcare

The US healthcare sector has been supported by long-term demographic trends. Ageing populations around the world have created additional demand for medicines, while rising costs facilitates a need for increased efficiency within the healthcare ecosystem2. The number of Americans ages 65 and older is projected to increase from 58 million in 2022 to 82 million by 20503 and for many European countries, populations are ageing even faster.

There is also significant innovation in the healthcare sector. Breakthrough drugs on obesity, cancer and gene therapy could be a game-changer for a number of the pharmaceutical giants. In 2023, GLP1 drugs, designed to tackle obesity and diabetes, proved to be blockbusters, and the growth prospects for some of those new products remain very strong.

Supply chain restructure can be beneficial to investors

Supply chain disruption during the pandemic, combined with mounting geopolitical tensions has led many companies to review and re-engineer their supply chains. A recent survey by McKinsey found that almost two-thirds (64%) of respondents are currently regionalising their supply chains, up from 44% last year.4 It is a phenomenon we see across the companies in which we invest.

This ‘near-shoring’ takes different forms. Some will be bringing manufacturing back to the US, while others will look for skilled manufacturing options in friendly neighbouring countries such as Mexico. Either way, it is bringing new opportunities for US businesses. Our preferred exposures are through technology hardware, storage and peripherals and communications equipment companies, where we find beneficiaries of this trend.

The energy transition still relies on natural resources

Our focus on sustainability places a high hurdle for energy companies to be included in the portfolio, but traditional oil and gas operators are critical in the energy transition towards less carbon intensive sources. At the same time, demand for energy continues to rise: AI is energy-intensive and requires the build-out of new data centres to support it.

As a result, in the portfolio, we hold a number of attractively priced energy operators with good resource assets that have the opportunity to improve upon environmental issues or demonstrate clear leadership in sustainability. This may be through exposure to renewables or commitments to carbon neutral outcomes.

There are other themes that are tangential to AI. To date, a lot of the focus has been on the infrastructure of AI, rather than the usage of it. We believe companies with large, proprietary data sets will be in a good position to harness AI, and deploy it in their business. This may deliver significant productivity advantages.

Investors do not need to focus narrowly on artificial intelligence to find sources of growth in the US market. In reality, there are a range of structural growth themes, which have been less in the spotlight and where pricing is better as a result.

1 Morgan Stanley - Stock Market Concentration – how much is too much? - June 2024 (p2)
2 BlackRock - BRSA Half yearly report - April 2024
3 Population Reference Bureau - Factsheet: Ageing in the United States - January 2024
4 McKinsey - Tech and regionalization bolster supply chains, but complacency looms - November 2023


Risk Warnings

Investors should refer to the prospectus or offering documentation for the funds full list of risks.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

Trust-specific risks

Capital Growth / Income Variation

Investors in the Fund should understand that capital growth is not a priority and values may fluctuate and the level of income may vary from time to time and is not guaranteed.

Currency Risk

The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.

Derivatives Risk

Derivatives may be highly sensitive to changes in the value of the asset on which they are based and can increase the size of losses and gains, resulting in greater fluctuations in the value of the Fund. The impact to the Fund can be greater where derivatives are used in an extensive or complex way.

Derivative Risk (Derivatives, Options, Covered calls)

The Fund uses derivatives as part of its investment strategy. Compared to a fund which only invests in traditional instruments such as stocks and bonds, derivatives are potentially subject to a higher level of risk.

Gearing Risk

Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Investment Trust Disclaimers

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.

Important Information

In the UK this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

UK Investment Trust Funds: This document is marketing material. The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.

The investment trusts in this document currently conduct their affairs so that their securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to nonmainstream investment products and intend to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are securities issued by investment trusts. Investors should understand all characteristics of the funds objective before investing. For information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in local language in registered jurisdictions.

BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the fund specific risks in the Key Investor Document (KID) which gives more information about the risk profile of the investment. The KID and other documentation are available on the relevant product pages at www.blackrock.co.uk/its. We recommend you seek independent professional advice prior to investing.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

© 2024 BlackRock, Inc. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS and iSHARES are trademarks of BlackRock, Inc. or its subsidiaries in the United States and elsewhere. All other trademarks are those of their respective owners.

MKTGH0824E/S-3802723

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