Editing BlackRock Sustainable American Income Trust
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== Summary == | == Summary == | ||
BlackRock Sustainable American Income Trust (BRSA) changed its investment strategy at the end of July 2021 to integrate explicit ESG objectives. It has three managers: Tony DeSpirito, David Zhao and Lisa Yang, who form part of BlackRock’s US income & value investment team. They aim to deliver an attractive level of income and long-term capital appreciation from a portfolio of dividend-paying companies that are trading at attractive valuations and are deemed to be ESG leaders, improvers or ‘sustainability enablers’. The managers explain that growth companies tend to be highly rated on ESG metrics, but BRSA offers a value fund with superior ESG traits, which sets it apart from the competition. Growth stocks have led the US market over the last decade; however, data from BlackRock show that value stocks should perform relatively better in the current environment of rising interest rates. | BlackRock Sustainable American Income Trust (BRSA) changed its investment strategy at the end of July 2021 to integrate explicit ESG objectives. It has three managers: Tony DeSpirito, David Zhao and Lisa Yang, who form part of BlackRock’s US income & value investment team. They aim to deliver an attractive level of income and long-term capital appreciation from a portfolio of dividend-paying companies that are trading at attractive valuations and are deemed to be ESG leaders, improvers or ‘sustainability enablers’. The managers explain that growth companies tend to be highly rated on ESG metrics, but BRSA offers a value fund with superior ESG traits, which sets it apart from the competition. Growth stocks have led the US market over the last decade; however, data from BlackRock show that value stocks should perform relatively better in the current environment of rising interest rates. | ||
'''Significant outperformance of growth versus value stocks in last five years'''<ref>Source: Morningstar, Edison Investment Research.</ref> | '''Significant outperformance of growth versus value stocks in last five years'''<ref>Source: Morningstar, Edison Investment Research.</ref> | ||
[[File:Significant outperformance of growth versus value stocks in last five years.png|600px]] | [[File:Significant outperformance of growth versus value stocks in last five years.png|600px]] | ||
'''The analyst’s view''' | |||
'''The analyst’s view''' | '''The analyst’s view''' | ||
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== Valuation: Broadly trading around a 5% discount == | == Valuation: Broadly trading around a 5% discount == | ||
BRSA is currently trading at a 4.3% discount to cum-income NAV, which compares to a range of a 1.3% premium to an 8.9% discount over the last 12 months. It is wider than the average discounts of 4.8%, 3.1% and 3.2% over the last one, three and five years respectively. There is scope for a higher valuation if investors gain a greater understanding about the trust’s change in strategy with ESG considerations at the heart of the investment process. | BRSA is currently trading at a 4.3% discount to cum-income NAV, which compares to a range of a 1.3% premium to an 8.9% discount over the last 12 months. It is wider than the average discounts of 4.8%, 3.1% and 3.2% over the last one, three and five years respectively. There is scope for a higher valuation if investors gain a greater understanding about the trust’s change in strategy with ESG considerations at the heart of the investment process. | ||
Renewed annually, BRSA has the authority to repurchase up to 14.99% and allot up to 10% of its share capital. In November 2020, 190k shares were repurchased at an average 6.8% discount, costing c £0.3m, while in April 2021, 445k shares were reissued from treasury at an average 1.7% premium to NAV for a gross consideration of c £0.9m. No further shares have been repurchased or reissued since then. | Renewed annually, BRSA has the authority to repurchase up to 14.99% and allot up to 10% of its share capital. In November 2020, 190k shares were repurchased at an average 6.8% discount, costing c £0.3m, while in April 2021, 445k shares were reissued from treasury at an average 1.7% premium to NAV for a gross consideration of c £0.9m. No further shares have been repurchased or reissued since then. | ||
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== Capital structure == | == Capital structure == | ||
BRSA is a conventional investment trust with one class of share. There are 80.2m ordinary shares in issue. At end-FY21, 96.4% of the trust’s shares were held by banks or nominees (including retail investor platforms), which was a modest decrease compared with 98.1% at end FY20. BRSA’s average daily trading volume over the last 12 months was c 120k shares. | BRSA is a conventional investment trust with one class of share. There are 80.2m ordinary shares in issue. At end-FY21, 96.4% of the trust’s shares were held by banks or nominees (including retail investor platforms), which was a modest decrease compared with 98.1% at end FY20. BRSA’s average daily trading volume over the last 12 months was c 120k shares. | ||
== The board == | == The board == | ||
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==Notes== | ==Notes== | ||