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BlackRock North American lags benchmark

BlackRock North American lags benchmark but higher dividend boosts share price – “For the financial year ending 31 October 2018, the NAV total return was modestly below that of the benchmark, the Russell 1000 Value Index. Over the same period, U.S. large cap stocks, as represented by the broader S&P 500 Index, advanced by 7.34% (in U.S. dollar terms). The S&P 500 Index concluded 2017 with its ninth straight year of positive returns, and for the first time in its history delivered gains in each month of the year.

The portfolio generated relative outperformance in nine out of eleven industry sectors during the year. The largest contributor to relative performance was the above benchmark exposure to the
health care sector, in particular health care providers and the health services industry. A heightened exposure to pharmaceuticals was also beneficial, as was stock selection in the industry. In energy, stock selection among oil, gas & consumable fuels firms contributed to relative performance, and our general avoidance of energy equipment & services companies proved beneficial. Stock selection decisions in the consumer staples sector also boosted relative returns. Notably, selection in the beverages industry contributed to relative results. Stock selection in information technology, specifically the software industry, proved beneficial to relative performance, as did stock selection in communication services.

At the sector level, the primary detractor from relative performance was stock selection in financials. Notably, selection decisions in the insurance and capital markets industries proved to be costly, as was the below benchmark exposure to the diversified financial services industry. Stock selection in the materials sector also detracted from relative returns, although our below benchmark exposure to the sector was beneficial. At the industry level, selection among chemicals firms and our decision to hold exposure to the construction materials industry proved detrimental.

As expected, writing covered call options in a rising equity environment capped upside returns during the period and therefore detracted modestly from absolute performance. As designed, the company’s option overwrite component enhanced the portfolio’s income during the period.”

BRNA : BlackRock North American lags benchmark

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