BlackRock American Income plans to remodel its offering following a period of challenging performance.
The changes, which shareholders will vote on at an AGM on 16 April, include a change of mandate, reduced fees, and a tender offer of up to 20%.
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The trust is planning to adopt a systematic active equity investment process, which combines big data, artificial intelligence and human input to build an actively managed portfolio.
The fund will maintain its value focus, as it provides a diversifier from US growth allocations. However, its regional focus will narrow from North America to solely the US.
As part of the fee reduction, the management fee will be set at 0.35% of the trust’s NAV for assets up to £350m. NAV exceeding £350m will be subject to a 0.3% charge.
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In a stock exchange announcement, the board of the £142m trust said it recognises that performance relative to its Russell 1000 Value Index benchmark has been “challenged for some time”.
The proposals are subject to approval from shareholders, and will only be voted on if the trust passes a continuation vote at its next AGM.
Chair Alice Ryder said: “The introduction of a systematic investment strategy is an exciting and truly innovative development for BRAI. It combines the power of big data and AI, with the best elements of a UK investment company: the ability to enhance the dividend distribution and use gearing, and the presence of an independent board of directors.
“Alongside a substantially reduced management fee and an increased yield, we believe this new strategy will be attractive to investors who desire access to undervalued US companies, at a time when valuations in the market as a whole remain stretched.”