March’s Stock Focus article looks at the North American Investment Trust (NAIT). For incomeseeking investors, the United States can be a challenging equity market, but there are potential opportunities out there. By Ruth Harris, Investment Research Analyst.
For income-seeking investors, the United States can be a challenging equity market. Since 2020, the dividend yield on the S&P 500 has been consistently under 2%, substantially less than UK and European equity markets. Many US companies often prefer to buyback stock as opposed to offering a dividend, due to preferential tax treatment for shareholders. That said, given the scale and historic strength of the US market, investors who need an income may still desire an allocation to the region.
The North American Income Trust (NAIT) is one investment trust designed to offer a relatively attractive yield in the US market. As of the end of January 2026 the yield was 3.3%, with the Trust paying dividends four times per year. The Trust’s board has adopted a progressive dividend policy and has increased the dividend every year since 2011, though this is not guaranteed.
Experienced equity management
The Trust was historically managed by Aberdeen Investments under Fran Radano but, following a board review and struggling performance, the mandate moved to Janus Henderson. Fran Radano moved to Janus Henderson alongside the Trust and now works alongside co-manager Jeremiah Buckley. Both have significant experience managing US equity strategies, with complementary styles leading to a balanced approach to income investing.
A focus on income
Traditionally, the income focus of the Trust meant majority investment in higher-dividend, cheaper companies, such as financials, industrials and healthcare. Many of these sectors have struggled in recent years, which was a headwind to strategy performance. When the management moved to Janus Henderson, the portfolio was shifted to a more moderated style balance with some exposure to lower yielding, fastgrowing companies, such as those in the technology and communications sectors. While the initial yield on the portfolio fell, the approach has worked for total returns and, in the twelve months to the end of January 2026, the Trust saw a share price return of 13.8%, ahead of the reference index 4.9%.
As well as being potentially appealing for income-seeking investors, NAIT also offers diversification away from the S&P 500. Technology names such as Nvidia, Apple, Microsoft and Alphabet, as well as names outside the IT sector but are exposed to technology, such as Amazon and Tesla, comprise 32% of the index. Due to NAIT’s investment style, it has limited exposure to such names, with only an 11.5% weighting to information technology. It has a greater emphasis on the financial and health care sectors, with top holdings including pharmaceutical company Johnson & Johnson, oil and gas major Chevron, and PNC Financial Services, a large US bank. If there are investor concerns around the large technology companies, in particular if there are concerns about the build-out of artificial intelligence (AI), NAIT could provide diversified exposure to other areas of the US equity market. If we see a continued concentrated market rally in IT names, we expect NAIT to lag due to its limited exposure to this area. However, given the more flexible investing approach, the managers are able to take advantage of opportunities in the market, for example by investing in companies which saw a sharp fall in share price in April 2025 during the fallout from President Donald Trump’s ‘Liberation Day’ tariffs.
Potential headwinds
The Trust’s ongoing charge of 0.77% is in line with peers in the US investment trust sector, but more expensive than some passive strategies which look to replicate the performance of an index. Shareholders in investment trusts can also see a headwind to performance from shares trading at a discount to the Net Asset Value (NAV) of the Trust’s holdings. Even if the underlying assets perform well, an increasing discount can lead to lacklustre shareholder returns. Over the last year, NAIT’s discount has narrowed significantly to around -3.3% as of early March. However, any cooling investor sentiment, either to the US equity market or the investment trust sector in general, could lead to the discount widening. A sell off in the market could lead to both NAV falling and the discount increasing, causing an even greater fall in share price. Moreover, weakness in the US health care or financial sectors would have a disproportionate impact on the Trust given its exposure to those areas. However, NAIT may continue to appeal to investors looking for income in the US market, as well as those who are hesitant around valuations related to the artificial intelligence trade after a strong period of performance.
This article was taken from the March 2026 issue of Market Insight. To subscribe to our investment publications, please visit www.redmayne.co.uk/publications.
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. Investments and income arising from them can fall as well as rise in value. Past performance and forecasts are not reliable indicators of future results and performance. The information and views were correct at time of publishing but may have changed at point of reading.