BlackRock American Income shareholders approved plans to change the £130m trust’s investment approach to a systematic strategy at its AGM last week following a period of “challenged” performance.
It will be the first investment trust in the UK to adopt a quantitative approach, it said, and will integrate artificial intelligence into its decision making.
The trust reviewed its strategy in February after a prolonged period of underperformance. Its total return of 58% over the past five years trails 31.4 percentage points behind the IT North America average and 8.6 percentage points behind its Russell 1000 Value benchmark, according to FE.
Chair David Barron hopes the new data-led approach will improve this, stating: “The trust’s adoption of a systematic investment strategy combines the use of artificial intelligence, big data and BlackRock’s human expertise, with the unique advantages of the UK investment trust structure. The company is now uniquely positioned in the market with a truly innovative approach.”
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This quantitative approach will also bring down the trust’s management fee from 0.7% to 0.35% and boost its dividend yield from 4.15% to 6% annually, the trust said.
Barron added: “With a lower cost base, enhanced income distribution and a compelling value-oriented approach to US equities, we are confident this transformation will lead to substantial benefits for shareholders.”
BlackRock American Income also scrapped its ESG screens and targets as part of the strategy change.
It removed ‘sustainable’ from its name in November last year, noting that “adopting a label under SDR would require a change to the strategy”.