DEFA14A: ISS Rejects Saba's Proposals to Terminate BlackRock as Investment Adviser for Multiple Closed-End Funds

Institutional Shareholder Services (ISS) recommends shareholders vote against Saba Capital Management's proposals to terminate BlackRock as investment adviser for several closed-end funds and supports BlackRock's board nominees.

Summary

• Institutional Shareholder Services (ISS), a leading independent proxy advisory firm, has issued reports recommending shareholders vote against proposals by Saba Capital Management to terminate BlackRock as investment adviser for multiple closed-end funds.
• ISS supports BlackRock's board nominees at BCAT, BMEZ, BNY, and MPA.
• The recommendations cover BlackRock Capital Allocation Term Trust (BCAT), BlackRock California Municipal Income Trust (BFZ), BlackRock Innovation and Growth Term Trust (BIGZ), BlackRock Health Sciences Term Trust (BMEZ), BlackRock Science and Technology Term Trust (BSTZ), and BlackRock ESG Capital Allocation Term Trust (ECAT).
• ISS also supports board nominee Arthur Steinmetz at both BlackRock MuniHoldings New York Quality Fund, Inc. (MHN) and BlackRock MuniYield New York Quality Fund, Inc. (MYN).
• ISS rejected the nominees put forth by Saba at the majority of the funds.
• BlackRock has recently announced enhancements across its closed-end fund complex, including discount management programs, distribution increases, and fee waivers, providing $2.9 billion in liquidity.

Sentiment

Score: 7

Explanation: The document presents a positive outlook for BlackRock, with ISS support for its management and board nominees. However, there are some concerns regarding ISS's lack of support for nominees at BIGZ and ECAT, and general risks associated with market conditions.

Positives

• ISS support validates BlackRock's investment experience and the Boards track record of stewardship.
• ISS recognizes improvements in fund returns and narrower discounts to NAV for funds like BCAT and ECAT.
• BlackRock's enhancements provide $2.9 billion in liquidity across its closed-end funds.

Negatives

• ISS did not support BlackRock's nominees at BIGZ and ECAT, though BlackRock disagrees with some of their conclusions.

Risks

• Changes and volatility in political, economic, or industry conditions could impact the funds.
• The relative and absolute investment performance of the funds could affect demand.
• Increased competition could pose a risk.
• Unfavorable resolution of legal proceedings could have a negative impact.
• Technological changes could present challenges.
• Legislative and regulatory actions could affect the funds.
• Terrorist activities, international hostilities, health epidemics, and natural disasters could adversely affect the economy and markets.
• BlackRock's ability to attract and retain talented professionals is crucial.
• Problems at other financial institutions could have an impact.
• The impact of BlackRock electing to provide support to its products from time to time.

Future Outlook

BlackRock will update performance and other data for the funds monthly on its website.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated that the ISS recommendations speak to BlackRock's depth of investment experience and the Boards track record of stewardship.
• Hubbard added that BlackRock believes its nominees are the right stewards to represent all shareholders.

Industry Context

This announcement reflects the ongoing engagement between activist investors like Saba Capital and large asset managers like BlackRock regarding the management and performance of closed-end funds. Proxy advisory firms like ISS play a crucial role in influencing shareholder voting decisions.

Comparison to Industry Standards

• The document references Liberty All-Star Growth Fund, Inc. (ASG) when comparing BIGZ's distribution rate.
• The document mentions that BCAT trades at a narrower discount to NAV than peers.
• ECAT has improved returns, such that TSR since inception is now better than peers, and has narrowed the NAV discount, bringing the measure in line with peers

Stakeholder Impact

• Shareholders are encouraged to vote on the proposals.
• The outcome of the votes will impact the management and direction of the closed-end funds.

Next Steps

• Shareholders are encouraged to vote using the WHITE proxy card.
• BlackRock will update fund performance data monthly on its website.

Key Dates

Keywords

BlackRock, Saba Capital, ISS, proxy advisory, closed-end funds, board nominees, investment adviser, BCAT, BMEZ, BFZ, BIGZ, BSTZ, ECAT, MHN, MYN, BNY, MPA