Fund Research

BlackRock North American Income Trust

Last update 31 October 2018
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BlackRock is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.

Please see the important information by following this link or at the bottom of the page.

Investment objective

To provide an attractive and growing level of income return with capital appreciation over the long-term, predominantly through investment in a diversified portfolio of primarily large-cap U.S. equities.

Group/Investment

BlackRock North American Income

Ticker

BRNA

Management Company

BlackRock

Manager Name

Tony Despiritio, Franco Tapia and David Zhao

Association of Investment Companies (AIC) Sector

North America

Market Price

167p

Yield

4.6%

Dividend Distribution Frequency

Quarterly

Latest Market Capitalisation

£115,019,653

Latest Net Gearing (Cum Fair)

-

Latest Ongoing Charge Ex Perf Fee

1.07%

Turnover Ratio %

80.88%

Shares Outstanding

68,874,044

Discount (Cum Fair)

-2.5%

BlackRock North American Income Trust (BRNA) has a diversified portfolio comprised mainly of US equities, focused on the 500 largest stocks by market cap. The company’s objective is to provide an attractive and growing level of income return with capital appreciation over the long term. The managers have a low-turnover approach, and a strong focus on valuation, aiming for well-established cash generative companies with clear revenue streams and the potential for dividend growth.

The board announced plans in December last year to boost the dividend the trust pays by paying a small proportion from capital, and have specified a quarterly dividend of 2p per share for the current financial year. As such the trust currently offers a yield of 4.6%, putting it comfortably ahead of all of its comparable peers in the AIC North America sector on yield terms (excluding the highly idiosyncratic, and therefore probably not comparable, Middlefield Canadian Income trust).

The trust was launched in September 2012 and, because of its focus on quality and valuations, had a rocky start, underperforming the index in 2013 and 2014 as bond proxies and financials raced ahead. Stock selection also played a part. Since then, Tony DeSpirito, David Zhao and Franco Tapia turned the performance around, focusing particularly on formalising the investment process. This has involved increasing the number of staff in the team, as well as developing a new quant screen to ensure opportunities are flagged up more rigorously. The team now consists of 21 investment professionals, with on average over a decade’s worth of experience. The trust outperformed the index in 2015 and then kept pace with it in 2016. More latterly, 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.

Over the past year the discount has been relatively volatile, ranging between c.-10% and -2.3%. At the time of writing, the discount is -2.5%, with the consistent outperformance since 2015 helping to improve sentiment towards the trust.

BRNA remains relatively small with net assets of £121m but it offers a very high yield, and this may increase its appeal to larger investors who might otherwise consider it too illiquid to be an option, particularly given the board’s demonstrable willingness to buy back shares.

William Sobczak

Important Information

BlackRock is a client of Kepler Trust Intelligence. Material produced by Kepler Trust Intelligence should be considered as factual information only and not an indication as to the desirability or appropriateness of investing in the security discussed.

Please see the important information by following this link or at the bottom of the page.

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Fund History: BlackRock North American Income Trust

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