Edison Investment Research Limited
London, UK, 26 May 2022
BlackRock Sustainable American Income Trust (BRSA): Initiation - A novel approach focusing on income and ESG
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.
BRSA’s current 4.3% discount to cum-income NAV compares with the 3.1% to 4.8% range of average discounts over the last one, three and five years. There is the potential for a narrower discount once investors gain a greater understanding about the trust’s unique proposition of an attractive dividend yield from a reasonably priced portfolio of quality companies with above-market ESG credentials.
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