Over the six months ended 30 April 2015 BlackRock North American Income delivered a 5.7% return on net assets and a 6.7% return to shareholders. By contrast the return on the Russell 1000 Index was 7.1%. The Board, chaired by Simon Miller (pictured), felt the need to stress to the manager that performance against the index must improve but acknowledged that the general market environment did not suit the manager’s style.
They have increased the latest quarterly payment by 10% to 1.1p, making 2.1p for the six month period.
They held a 20% tender offer in January which was oversubscribed and were due to hold another now but the Board decided the fund was shrinking too fast and abandoned the idea – they promise to use buybacks to control the discount instead.
The manager’s report says part of the performance problem can be attributed to some of the fund’s Financials holdings, notably Prudential and MetLife – which he seems to imply suffered as a result of falling interest rates – American Express and Toronto-Dominion Bank. They were also underweight in healthcare at a time when that sector was doing well.
On the positive side of the equation, being underweight in energy stocks and holding Kraft and Kroger were helpful.
BRNA : BlackRock North American Board getting worried about performance