BLACKROCK UK INCOME A

Investment Process

The fund invests at least 70% of assets in UK equities from the FTSE All-Share index, retaining the flexibility to invest the remainder outside the UK if the managers believe there are best in class companies or want access to a sector not represented in the UK. The managers take a top-down economic view as well as using bottom-up stock selection, helped by BlackRock’s huge team of analysts. They invest in resilient companies with sustainable free cash flow, good management, and strong balance sheets. The managers also place a big emphasis on the quality of a company’s management team and its ability to correctly allocate capital. Most of the fund is invested in high quality stocks growing their dividends year-on-year. Around 30% is invested in those with the potential to produce attractive free cashflow and grow dividends in the future. This gives the managers flexibility to not just focus on traditional income names but invest in stocks where they can see a road map to strong cashflow performance. The managers are benchmark aware on a sector level, but run a relatively concentrated and high conviction portfolio of 35-40 names. Positions are sized according to risk and potential return. The fund’s highest weighted sectors are financials, consumer discretionary and consumer staples.