Our annual report summary series delivers a condensed analysis of a selected investment trust's annual report, including details of the trust's aim, investment style, portfolio focuses, gearing policy, charges and performance.
BLACKROCK NORTH AMERICAN INCOME
BlackRock North American Income Trust (BRNA) seeks to provide an attractive and growing income with capital appreciation over the long term, predominantly through investment in large-capitalisation US equities.
BRNA's annual report for the year to 31 October 2016 shows shareholders' assets of £109 million.
Bob Shearer has managed the trust since launch in October 2012. Tony DeSpirito joined him as co-manager in 2014.
They are committed to the disciplined application of value investment principles, an emphasis on owning quality and sustainable businesses with good dividend growth prospects, and a long-term investment horizon.
They are expected to hold a portfolio of 80 to 120 quoted securities, and to deploy an options overlay strategy using predominantly covered call options.
At 31 October 2016 BRNA held 89 equities, of which 79 were US-quoted, and 186 individual open options.
The largest sector weightings were financials at 25.8 per cent, healthcare at 14.7 per cent and industrials at 12.5 per cent, all of which were overweight in relation to its benchmark, the Russell 1000 Value index.
Writing covered call options detracted modestly from capital gains last year, as is to be expected in a rising equity environment, but enhanced the trust's income.
Net asset value (NAV) total returns of 34.2 per cent last year almost matched the 34.6 per cent rise in its benchmark. Both benefited substantially from sterling devaluation.
With the discount to NAV contracting to 1.9 per cent, share price total returns were 43 per cent. Dividends increased 0.1p a quarter to 4.7p.
A cut in the base fee to 0.75 per cent of net assets reduced ongoing charges to 1.04 per cent. The board admits BRNA's performance has lagged its benchmark since inception, but remains confident it will deliver over the long term.
The discount ranged from 12.7 per cent to 0.7 per cent over the year. Buybacks to prevent the shares trading 'at a significant discount' cost £12.9 million.
See the full annual report on the BlackRock website.
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