Edison issues review on BlackRock Sustainable American Income Trust (BRSA): Unique value/ESG fund at an attractive valuation

London, UK, 9 Mai 2024

Edison issues review on BlackRock Sustainable American Income Trust (BRSA): Unique value/ESG fund at an attractive valuation

BlackRock Sustainable American Income Trust (BRSA) offers a unique opportunity to invest in a fund that focuses on both value and sustainability. The trust’s three managers, Tony DeSpirito, David Zhao and Lisa Yang, aim to deliver an attractive level of income and long-term capital growth from a portfolio of attractively valued, high-quality, dividend-paying companies, which have favourable ESG credentials either as leaders, improvers or ‘sustainability enablers’. BRSA’s managers are finding attractive opportunities due to the historically wide valuation gap between value stocks and the broad US market. Data from BlackRock show that since 1978, following a peak in the interest rate cycle, which is the consensus outcome given moderating US inflation, quality stocks outperformed over the subsequent one, two and three years; this should also bode well for the trust’s relative performance.

The trust has considerable distributable reserves, which allows the board to continue to pay an 8.0c annual dividend. This equates to an attractive above-market 3.9% yield. BRSA’s current 8.8% discount compares to a range of a 1.3% premium to a 13.6% discount over the last three years. It is wider than the 4.6% to 8.6% range of average discounts over the last one, three, five and 10 years. There is scope for a higher valuation in a more settled economic environment or if the trust’s relative performance improves.

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