BlackRock American Income Trust – And now for something completely different

  • 27 November 2025
  • QuotedData

  1. And now for something completely different
  2. How does new BRAI differ from old BRAI?
  3. The macroeconomic backdrop
  4. The portfolio
  5. Performance
  6. Dividends
  7. Premium/(discount)
  8. Structure

And now for something completely different

Earlier this year, BlackRock American Income (BRAI) announced a radical shake up. It asked shareholders to approve a new investment objective and policy, announced a new enhanced dividend policy, cut management fees drastically, and offered shareholders a 20% tender at a 2% discount to NAV (after costs).

The proposals were welcomed by investors, with more than 99% of those voting giving their approval. The tender offer was undersubscribed, with just 16.15% of BRAI’s shares validly tendered.

In its new form, the trust is following an investment approach distinct from any other investment company listed in the UK – investing using a systematic active equity approach devised by BlackRock (which uses data-driven insights to identify and take advantage of mispriced stocks). This note seeks to explain BRAI’s new approach and the corporate structure that supports that. Whilst we have included some historical performance data for reference in the charts on this page, further analysis of it feels redundant. Instead, we have focused on BRAI’s returns since the strategy change.

The portfolio continues to focus on income and capital growth from US value stocks, offering diversification for investors mainly exposed to large US tech stocks. There has been a major change in how investments are chosen, detailed further below.

Attractive income and growth from US value stocks, using a systematic active equity approach

BRAI aims to provide long-term capital growth, whilst paying an attractive level of income (1.5% of NAV per quarter, around 6% of NAV per annum). BRAI follows a systematic active equity approach that aims to provide consistent outperformance of the Russell 1000 Value Index (the benchmark).

At a glance

Share price and discount

Over the 12 months to 31 October 2025, BRAI’s shares traded at a discount to NAV ranging from 11.9% to 1.0%, averaging 6.3%. As of 26 November 2025, the discount stood at 5.4%.

The discount increased during 2023 as markets were led by the Magnificent Seven and value stocks lagged. BRAI’s rating started to recover in October, helped by the expected tender offer, and is now at a more reasonable level. The board hopes investors will support the new strategy and help the trust grow again.

Time period 31 October 2020 to 25 November 2025

Source: Bloomberg, Marten & Co

Performance over five years

As mentioned earlier, we do not consider BRAI’s returns before the strategy change relevant, however the graph here shows BRAI’s share price and NAV performance compared to its benchmark over the past five years. Figure 7 on page 9 illustrates BRAI’s strong start, regularly outperforming its objective. The S&P 500’s gains have been driven by a few large AI-related companies, while BRAI’s benchmark is more diversified. Notably, BRAI has delivered solid returns over the past six months without heavily relying on the mega-cap AI trend.

Time period 31 October 2020 to 31 October 2025

Source: Bloomberg, Marten & Co

More information is available on the trust’s website

How does new BRAI differ from old BRAI?

  • The portfolio continues to focus on income and capital growth from US value stocks, offering diversification for investors mainly exposed to large US tech stocks. There has been a major change in how investments are chosen, detailed further below.
  • The largest holding in any single stock is now capped at 1.5%. The number of stocks has increased from around 60 to 232 as of September 2025, reducing risk from individual companies.
  • Previously, the investment policy excluded some stocks for ESG reasons, but the new approach allows for a broader range of investments.
  • Costs have been significantly reduced, with the base management fee halved and a new tiered structure introduced (see page 11). Dividends have also increased to 1.5% per quarter, or about 6% a year (see page 9).
  • Regular exit opportunities linked to performance have been introduced, and investors will also have an exit option if the trust does not grow (see page 10).

What is systematic active equity?

Data-derived insights to spot mispriced stocks

BlackRock’s Systematic Active Equity (SAE) team uses data-driven insights to identify and take advantage of mispriced stocks. By September 2025, BlackRock managed over $313bn with this strategy across a range of global and regional portfolios, including long-only, partial short, hedge funds, and a London-listed investment company – the first of its kind. The SAE team has over 100 investment professionals in San Francisco and London, drawing on more than 40 years of experience in active investment management. While BRAI’s investment universe is no longer limited by ESG criteria, ESG analysis remains part of the research process.

BRAI’s universe is no longer constrained by ESG criteria

Continuous innovation

The SAE team is constantly innovating to improve results for investors. While quant-driven strategies have existed for years, managers now have access to much more data. Their role is to decide which information is useful, when to use it, how different datasets work together or during specific economic periods, and how much weight to give each insight when making investment decisions.

Few asset managers have the scale to succeed in this area

The SAE team was an early adopter of AI and machine learning

Processing this information requires significant computing power, which only a few asset managers can access at scale. The managers note that while early fundamental value data was structured and easy to analyse, most current datasets are unstructured text. The SAE team adopted AI and machine learning early to interpret this data effectively.

Beyond traditional company analysis, the SAE team uses hundreds of independent data sets, such as analyst reports, news articles, online search trends, transaction volumes, footfall, and app usage. On average, they assess 10 new data sets each month. Macroeconomic indicators are also included, using “now-casting” to gauge the economy’s current state.

Insights are thoroughly tested for their ability to predict company fundamentals and returns, with tools that can run a five-year back test in under two seconds. Managers retain final decision-making, and may delay trades during major market shocks.

The SAE approach leads to higher portfolio turnover (about 100%–200% per year), but trading costs are considered in every decision. Many trades are matched within BlackRock, helping to keep transaction costs down.

The output

The analysis covers:

  • Company fundamentals, including profitability, growth, financial strength, valuation, and management quality.
  • Market sentiment, considering analyst and investor views, management outlook, and investment flows. It also looks at whether the wider market environment and similar businesses support the stock.
  • Macroeconomic themes across industries, countries, and investment styles.
  • ESG risks, including how a business is exposed and what steps it is taking to manage them, how companies treat their staff, customers, and suppliers, and whether they face risks from the move to a carbon-neutral world.
  • The managers use a set of signals to score each stock, blending these scores to form an overall view. Stocks with higher scores are expected to deliver better returns, guiding the portfolio’s construction to balance risk and return after costs.
  • The portfolio usually holds 150 to 250 large- and mid-cap stocks. While BRAI can invest up to 20% of assets outside the US, it is now likely to be fully invested in US equities.

The macroeconomic backdrop

Markets have recovered from the selloff associated with Liberation Day

President Trump’s policy agenda, especially his tariff policy, has had a major impact on global markets. After quickly imposing tariffs on imports from Canada and Mexico, the key moment came on “Liberation Day” (2 April 2025) when tariffs were announced on almost all imports. Markets reacted negatively, prompting a temporary reduction of most tariffs to 10%. This led to a market recovery, helped by announcements of various trade deals, though not all are finalised, which encouraged a return to risk-taking.

The AI investment boom, which started in March 2023 with ChatGPT-4, faced its first major challenge in January 2025 when DeepSeek claimed to have developed a new large language model at much lower cost than US rivals. This caused a sharp sell-off in the Magnificent Seven tech stocks, with money moving into other US stocks and overseas markets. These large US tech companies were also affected by the Liberation Day market falls. Despite this, investment in AI infrastructure continued strongly, helping to restore confidence.

Today, US mega-cap tech stocks once again lead the S&P 500. For investors who want US exposure but prefer not to concentrate too heavily on these giants, BRAI offers useful diversification.

BRAI offers a way of diversifying US exposure away from the Mag 7

Figure 1: S&P 500 Index over 12 months to end October 2025

Source: Bloomberg