BlackRock North American Income Trust reports performance just ahead of its benchmark for the year ended 31 October 2015. the NAV total return was 4.9% vs. 4.1% for the Russell 1000 Value Index. The share price total return was 4.7%. The total dividend for the year rose by 7.5% to 4.3p.
The Board are asking shareholders to approve an increase in the maximum that can be invested in any one sector to 35% of gross assets from the current 25%.
The manager’s report says the largest contributors to relative performance were a combination of stock selection and an underweight to the energy sector. Notably, selective exposure to integrated oil & gas operators and an underweight to the oil services industry proved to be beneficial as WTI crude oil prices declined by over 52% for the twelve month period. Stock selection in the industrials sector also contributed positively as aerospace & defence manufacturers Northrop Grumman, Raytheon and Lockheed Martin outperformed on stronger than expected quarterly earnings and robust forward guidance. Lastly, stock selection in consumer staples and consumer discretionary sectors boosted relative returns for the year.
The largest detractor from relative performance was stock selection in the health care sector. Notably, not owning benchmark holdings Eli Lilly and Cigna proved to be costly. In regards to Cigna, the company outperformed due to merger and acquisition activity during the period; they do not own Cigna due to the firm’s diminutive dividend. A combination of stock selection and an overweight to materials also dampened relative performance. Notably, portfolio holding E I. du Pont de Nemours underperformed, primarily due to concerns about the sustainability of growth in its agriculture segment. Despite recent weakness, they continue to own the stock given our expectation for above-consensus strength in the company’s specialty chemical segment. Lastly, stock selection in telecommunications services and an underweight to financials also detracted modestly from relative returns for the year.
BRNA : BlackRock North American beats benchmark by avoiding oil exposure