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

Institutional Shareholder Services (ISS) recommends shareholders vote against Saba Capital's proposals to terminate BlackRock as investment adviser for multiple 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 the investment adviser for several closed-end funds.
• ISS supports BlackRock's board nominees at BlackRock Capital Allocation Term Trust (BCAT), BlackRock Health Sciences Term Trust (BMEZ), BlackRock New York Municipal Income Trust (BNY), and BlackRock MuniYield Pennsylvania Quality Fund (MPA).
• The recommendations cover funds including BCAT, BlackRock California Municipal Income Trust (BFZ), BlackRock Innovation and Growth Term Trust (BIGZ), BMEZ, BlackRock Science and Technology Term Trust (BSTZ), and BlackRock ESG Capital Allocation Term Trust (ECAT).
• ISS also recommends voting for 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 Saba's nominees at the majority of the funds.
• BlackRock highlights 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 conveys a positive sentiment due to ISS's support for BlackRock and the reported improvements in fund performance, although the ongoing challenge from Saba Capital introduces some uncertainty.

Positives

• ISS support for BlackRock's management and board nominees validates BlackRock's investment experience and stewardship.
• ISS recognizes improvements in fund returns and narrower discounts to NAV in some funds.
• BlackRock's enhancements, including discount management programs and fee waivers, benefit shareholders.

Negatives

• ISS did not support BlackRock's nominees at BIGZ and ECAT.
• Saba Capital Management is actively challenging BlackRock's management through proxy proposals.

Risks

• Changes in political, economic, or industry conditions could impact fund performance.
• Increased competition could affect the funds.
• Legislative and regulatory actions could pose risks.
• Terrorist activities, international hostilities, health epidemics, and natural disasters could adversely affect the economy and markets.
• Problems at other financial institutions could have a negative impact.

Future Outlook

BlackRock will update performance and other data for the funds on a monthly basis on their website.

Management Comments

• R. Glenn Hubbard, Chair of the Boards of BlackRock Closed-End Funds, stated that the ISS recommendations, as well as those from Glass Lewis, speak to BlackRock's depth of investment experience and the Boards track record of stewardship.
• Hubbard acknowledged ISS's lack of support for nominees at BIGZ and ECAT but expressed continued belief in their nominees' ability to represent all shareholders.

Industry Context

This announcement reflects the ongoing activist investor activity in the closed-end fund space, where firms like Saba Capital seek to influence fund management and governance.

Comparison to Industry Standards

• The document mentions Liberty All-Star Growth Fund, Inc. (ASG) as a comparable fund to BIGZ, noting that BIGZ's distribution rate has exceeded that of ASG over the past two calendar years.
• The document compares the discount to NAV and TSR of ECAT to its peers, noting improvements in these metrics.

Stakeholder Impact

• Shareholders are impacted by the proxy vote and the potential changes in fund management.
• The outcome of the vote affects BlackRock's role as investment adviser and the board's composition.

Next Steps

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

Key Dates

Keywords

BlackRock, Saba Capital, ISS, Proxy, Closed-End Funds, Investment Adviser, Board Nominees, Shareholders, BCAT, BMEZ, BFZ, BIGZ, BSTZ, ECAT, BNY, MPA, MHN, MYN