Fund Profile

BlackRock Sustainable American Income 20 July 2021

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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.

Overview
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Overview

On 30/07/2021 BlackRock North American Income announced its corporate name change to BlackRock Sustainable American Income Trust plc, following the successful shareholder vote at the General Meeting held on 29 July 2021.

Click here to read the RNS announcement

BlackRock North American Income Trust (BRNA) currently offers investors a portfolio of North American large-cap value companies, balancing capital growth and income provision. However, the board is seeking shareholder approval to alter the strategy, incorporating a substantially greater emphasis on ESG and sustainability as well as freeing up the managers to add additional value.

ESG will be further integrated through a number of ways, the first being the proposed use of an ESG screen, which will filter out the worst offenders. Next the team will aim to keep BRNA’s ESG scores superior to those of its benchmark, as well as having a lower carbon intensity score. Beyond these targets the team will look to add additional upside by identifying companies whose ESG credentials have been underappreciated by the market, and thus have the potential for a positive re-rating.

The team will also be able to invest in mid-cap stocks under the new proposal, increasing the range of potential ‘best ideas’ available to the managers. They will also aim to have a more concentrated portfolio, to focus the trust around the managers’ highest conviction stocks. The proposed changes to BRNA’s portfolio are outlined in more detail in the Portfolio and ESG sections. Regardless of the future change in policy, the last 12 months have seen a resurgence in the fortunes of value stocks, as we describe in the Performance section, with BRNA having closed the performance gap to the wider US market.

While the changes have the potential to impact BRNA’s underlying revenues, as we outline in the Dividend section, BRNA has the ability to fund its dividend through its capital account which may offset the loss in revenue. As a result of the potential changes, the board will no longer pursue a progressive dividend, though in practice they aim to maintain the dividend at the least. The trust yields 4.1% on a historic basis and currently trades on a 5.4% discount.

Analyst's View

We believe that the proposed changes to BRNA should benefit shareholders overall. Beyond simply aligning the portfolio with the ethical demands for a more sustainable society, we view the changes as improving the overall potential return BRNA can offer shareholders. By opening up the opportunity set to mid-cap stocks, and increasing its concentration, BRNA will be structured to better capitalise on the skills of the managers. Together with BRNA’s long-term performance and above-market yield we think this creates a powerful proposition.

We also believe that this shift towards a more sustainable investment profile shows the board’s commitment to keeping the trust relevant to the changing market demands, as ESG is becoming an ever increasingly important topic for investors. We note that within the closed-ended trust space there are few dedicated value strategies, and arguably no sustainable value strategies. This means that if the vote is successful BRNA will offer investors a new style of investing within the closed-ended space. We think this should improve the overall attractiveness of the strategy, especially as there are even fewer sustainable value strategies in the open-ended space.

Given the market gap BRNA may soon fill, we believe that the potential change in strategy may be the catalyst BRNA needs to narrow its discount. We note BRNA was trading at a premium prior to the pandemic crash.

bull bear
Potential change in strategy may improve overall return profile Could be less exposed to value with the addition of an ESG strategy
Becoming a sustainable value strategy may fill a niche in the fund market, narrowing the discount The proposed use of gearing would increase losses during falling markets
Value stocks have entered a period of strength due to the pandemic recovery More concentrated portfolio may mean higher NAV volatility
Continue to Portfolio

Fund History

14 Jun 2024 BlackRock Sustainable American Income Trust plc: A Look Ahead for 2024
As investors look ahead to 2024, they still need to decide whether to take the risk in equity markets, or keep their savings in cash. Cash rates remain high for the time being, and there are a range of factors that could create market volatility in the year ahead. Nevertheless, while the future is uncertain, there are a number of reasons to hold faith in the markets for long term income and capital growth...
04 Apr 2024 Fund Analysis
BRSA's portfolio trades at a significant P/E discount to the US market and is defensively positioned...
08 Feb 2024 Results analysis: BlackRock Sustainable American Income
BRSA's reference index, the Russell 1000 Value Index, is at an historical low in valuation terms...
10 Nov 2023 LATAM rate cuts and central bank gold buying
We take a look at some of the highlights of our BlackRock event…
03 Nov 2023 The inflation reduction act: one year on
The US’s vast climate change legislation programme is a year old. The team managing the BlackRock Sustainable American Income Trust says the Act is driving innovation in new transition technologies...
31 Oct 2023 BlackRock Sustainable American Income
Steve Farkas
Rewatch this webinar which was part of our October and November online event 'The Best of BlackRock'...
Watch Recording
06 Sep 2023 You should be dancing…
North America should be a core part of any portfolio…
07 Jun 2023 Under pressure
We identify the equity trusts which have delivered the best downside protection in recent years...
19 May 2023 The year ahead in US stock markets
Markets may have seen a short-lived rally in the latter part of 2022, but with tough economic conditions ahead, it is important to focus on those companies that can sustain their earnings, says Lisa Yang, manager of the BlackRock Sustainable American Income trust plc...
20 Apr 2023 Fund Analysis
BRSA: with a repeat of the last ten years of stock market behaviour seemingly unlikely, could value and sustainability come to the fore..?
31 Jan 2023 Results analysis: BlackRock Sustainable American Income
BRSA’s value-based investment style shows defensive qualities in difficult market conditions…
22 Sep 2022 Fund Analysis
BRSA’s ESG-conscious approach to US value investing has generated positive near-term returns despite the market rout…
07 Sep 2022 American muscle
Beating US indices is a monumental task. We examine the closed- and open-ended North American sectors to see how they have fared…
27 Jul 2022 Has the comeback begun?
Our analysts debate whether the market has fully priced in the current inflation and looming recession…
13 Jul 2022 Ready player one
We wonder where, if anywhere, should investors look for returns after a tumultuous first half of the year…
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...
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...
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...
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
16 Jan 2018 Fund Analysis
A large cap US equity portfolio offering a stronger yield than most of its peers, positioned for an inflationary environment...
28 Jun 2017 What does the future hold for US markets?
As the 45th president of the United States settles into the role, BlackRock North American Income Trust co-manager Tony DeSpirito talks about the future for the North American markets in the wake of a new political and economic environment.
27 Jun 2017 What's driving frontier markets?
Can political and economic reforms make a difference when it comes to looking for growth?
15 Jun 2017 Signs of continental shift
BlackRock's Stefan Gries explains what's driving opportunities in Greater Europe...
13 Jun 2017 Fund Analysis
An income-orientated US equity trust with a decent track record of outperformance since its change in strategy...
12 Jun 2017 Right place, right time
BlackRock's David Zhao and Franco Tapia explain how 2016 was a year of two halves for the US stock markets as the prospect of a return to growth improved the fortunes for certain market sectors.
08 Jun 2017 The long game
Highlights from BlackRock Income & Growth's annual general meeting...
05 Jun 2017 Emerging Opportunities
BlackRock's Chris Colunga discusses the advantages of emerging European countries...
View all

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