BlackRock North America sets revised target – yesterday the Read our guide to Boards and Directors" class="glossary_term">advice of BlackRock North American Income Trust has issued a circular to shareholders setting out recommended proposals for the adoption of a new investment objective investment policy and notice of a general meeting shareholders to approve this. The board says it is keen to keep the investment objective and investment policy both relevant and attractive to investors as the company moves into its second decade.
Following consultations with shareholders, the board determined that it continues to assess the dividend. Therefore, the company will seek to continue to provide an attractive level of income with capital appreciation over the long term. The board also understands that there is an ongoing preference for a regional North American focus, with some flexibility to invest globally to improve diversification, and believes investors will benefit from an expansion of attention beyond the United States to North America. The Board of Directors was aware of the increasing demand for investment products that place a sustainable investment philosophy at the heart of their concerns. In addition, the Board is of the opinion that the closed-end fund structure is well suited to a wallet comprising companies selected from large and mid-cap companies rather than exclusively large-cap issuers. Finally, the company has, since its inception, issued covered call options in order to generate income to fund the dividend which can now be realized using reserves. The Board of Directors considers that this feature may add unnecessary complexity to the portfolio in the eyes of investors and may act as a brake on capital growth. Therefore, the board of directors has decided to stop writing covered call options unless there are convincing investment arguments to do so.
Proposed objective and policy
The investment objective of the Company is to provide an attractive level of income as well as long term capital appreciation in a manner consistent with the sustainable investment principles adopted by the Company.
The Company invests primarily in a diversified portfolio of North American equity securities *, with an emphasis on large and mid-capitalization companies that pay and increase their dividends. “North America”, in accordance with the United Nations publication “Standard Country or Area Codes for Statistical Use”, means Bermuda, Canada, Greenland, Saint Pierre and Miquelon and the United States of America. America and “North America” ââshould be interpreted accordingly. The Company may also invest in equity securities of companies outside of North America, subject to the restrictions set out below, and may invest in securities denominated in currencies other than the official currencies of the relevant countries or regions in America. North. The Company may also hold other securities from time to time, including, but not limited to, options, futures, convertible securities, fixed interest securities, preference share, non-convertible preferred shares and certificates of deposit (these securities other than equity securities, together âOther securitiesâ). The Company may also write covered call options with respect to its portfolio.
the Investment manager takes an equity-specific approach in managing the company’s portfolio, selecting investments that she believes will both increase long-term value and provide income.
The Company does not invest in companies which are not listed, city or traded on a stock exchange at the time of investment, although it may have exposure to such companies where, after investment, the relevant securities cease to be listed, quoted or traded on a stock exchange.
Generally, it is expected that the investment portfolio will consist of between 30 and 60 equity securities.
Use of derivatives
The Company may invest in derivatives for efficient portfolio management and in options for investment purposes and may, for investment purposes, write covered call options in respect of its portfolio. Any use of derivative instruments for efficient portfolio management and / or options for investment purposes is carried out on the basis of the same principles of risk allocation and diversification that apply to the direct investments of the Company.
For the avoidance of doubt, the Company does not take physical or synthetic short positions and does not sell any uncovered options.
The risk of the portfolio is mitigated by investing in a diversified range of investments. In particular, the Company observes the following investment restrictions:
- no single investment (including, for the avoidance of doubt, no derivative instrument), at the time of investment, must represent more than 10 percent. the gross value of the assets of the Company;
- not more than 25 percent. of the gross value of the assets of the Company, at the time of investment, will be invested in securities which are not deemed to be North American securities *; and
- not more than 35 percent. the gross value of the assets of the Company, at the time of investment, will be exposed to a single sector;
- not more than 20 percent. of the gross value of the assets of the Company, at the time of investment, will be invested in other securities; and
- not more than 20 percent. of the Company’s portfolio will be under option at any time.
(* The securities may be considered North American securities if: (i) the principal activities of the company are conducted from North America; or (ii) the equity securities of the company are quoted, quoted or traded on a North American stock exchange; or (iii) the company carries on significant business in North America; or (iv) the issuer of securities is included in the company’s benchmark Index.)
The Company’s sustainable investment principles
In managing the Company’s portfolio, the Investment Manager, in addition to other investment criteria, takes into account environmental, social and governance aspects (âESGâ) The characteristics of the issuers of securities concerned and seeks to obtain an ESG result higher than that of the Benchmark Index by aiming for the Company’s portfolio to obtain: (i) a better ESG score than the Benchmark Index ; and (ii) a lower carbon emissions intensity score than the benchmark. The âBenchmark Indexâ is the Russell 1000 Value Index or such other index as may be agreed by the Company and the Investment Manager from time to time. However, there can be no assurance that these objectives will be achieved and the ESG rating of the Company’s portfolio and its carbon emission intensity score may vary.
The Investment Manager also applies a filtering policy (currently the BlackRock EMEA Baseline Screens) at the time of investment whereby it seeks to limit and / or exclude direct investment (if any) in companies which, in the opinion of the Investment Manager, are exposed or related to certain sectors (in some cases subject to specific income thresholds), including, but not limited to:
(i) the production of certain types of controversial weapons;
(ii) the distribution or production of firearms or small arms ammunition intended for private individuals;
(iii) the extraction of certain types of fossil fuels and / or the production of electricity from them;
(iv) the production of tobacco products or certain activities related to tobacco-related products; and
(v) issuers which have been deemed not to have complied with the principles of the United Nations Global Compact.
Following the application of the selection policy described above, the companies which have not yet been excluded from the investment are then evaluated by the investment manager according to their ability to manage risks and opportunities. associated with business practices that comply with ESG criteria and their references in terms of ESG risks and opportunities. , such as their leadership and governance framework, which is seen as essential for sustainable growth, their ability to strategically manage longer-term ESG issues and the potential impact this can have on a company’s finances. business. To undertake the required analyzes, the Investment Manager may use data provided by external ESG data providers, proprietary models and local intelligence and may undertake site visits.
If holdings which comply with the screening policy applied by the Investment Manager described above at the time of investment subsequently become ineligible, they will be transferred within a reasonable period of time.
The Company may acquire limited exposure (including, but not limited to, through investments in other closed-end investment funds and listed derivatives) to issuers whose exposure does not comply with the sustainable investment principles described above.
The circumstances in which such exposure may arise include, but are not limited to, when a counterparty to a derivative in which the Company invests provides collateral which is incompatible with the principles of sustainable investment of the Company or when a funds in which the Company invests does not apply any or the same sustainable investment principles as the Company and thus offers exposure to securities which do not comply with the Company’s sustainable investment principles. The Investment Manager may take corrective action in such circumstances.
Borrow and gear Politics
The Company can borrow up to 20 percent. of its net asset value (calculated at the time of drawdown), although borrowings are generally not expected to exceed 10 percent. of its net asset value at the time of the drawdown. Loans can be used for investment purposes. The Company has entered into a multi-currency overdraft facility for this purpose. The Company may enter into interest rates blanket provisions.
The Company’s foreign currency investments are not hedged against the pound sterling as part of the general policy. However, the investment team can use currency hedging, either against the pound sterling or between currencies (i.e. cross hedging of portfolio investments).
Other investment restrictions
In order to comply with the Listing Rules in force, the Company also complies with the following investment restrictions (which are not part of the Company’s investment policy):
- the Company will not exercise any significant commercial activity in the context of its group as a whole; and
- the Company will not invest more than 10 percent. of its gross asset value in other listed closed-end investment funds, whether or not they are managed by the Investment Manager, except that this restriction will not apply to investments in investment funds. fixed-capital investment listed who themselves have declared investment policies to invest no more than 15 percent. of their gross assets in other listed closed-end investment funds.
Changes to the investment policy
No material change will be made to the investment policy without shareholder approval by ordinary resolution.
BRNA: BlackRock North America sets revised target
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