The
information contained in this release was correct as at 31 March
2024. Information on the Company's up to date net asset values can
be found on the London Stock Exchange Website at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK INCOME & GROWTH INVESTMENT TRUST PLC
(LEI:5493003YBY59H9EJLJ16)
All
information is at
31 March
2024 and
unaudited.
Performance at
month end with net income reinvested
|
One
Month
|
Three
Months
|
One
Year
|
Three
Years
|
Five
Years
|
Since
1
April
2012
|
Sterling
|
|
|
|
|
|
|
Share
price
|
2.8%
|
0.5%
|
-1.3%
|
20.2%
|
19.9%
|
114.8%
|
Net
asset value
|
4.8%
|
1.2%
|
7.1%
|
24.0%
|
29.3%
|
125.6%
|
FTSE
All-Share Total Return
|
4.8%
|
3.6%
|
8.4%
|
26.1%
|
30.3%
|
122.7%
|
|
|
|
|
|
|
|
Source:
BlackRock
|
|
|
|
|
|
|
BlackRock took
over the investment management of the Company with effect from
1 April 2012.
At month
end
Sterling:
Net
asset value - capital only:
|
210.61p
|
Net
asset value - cum income*:
|
213.64p
|
Share
price:
|
183.00p
|
Total
assets (including income):
|
£47.3m
|
Discount to
cum-income NAV:
|
14.3%
|
Gearing:
|
7.0%
|
Net
yield**:
|
4.0%
|
Ordinary shares
in issue***:
|
20,258,536
|
Gearing range (as
a % of net assets):
|
0-20%
|
Ongoing
charges****:
|
1.28%
|
* Includes net
revenue of 3.03 pence per
share
|
**
The Company's yield based on dividends announced in the last 12
months as at the date of the release of this announcement is 4.0%
and includes the 2023 Interim Dividend of 2.60p per share declared
on 21 June 2023 with pay date 1 September 2023, and the 2023 final
dividend of 4.80p per share declared on 21 December 2023 with pay
date 15 March 2024.
|
***
excludes 10,081,532 shares held in
treasury.
|
****
The Company's ongoing charges are calculated as a percentage of
average daily net assets and using management fee and all other
operating expenses excluding finance costs, direct transaction
costs, custody transaction charges, VAT recovered, taxation and
certain non-recurring items for the year ended 31 October
2023.
|
Sector Analysis
|
Total assets (%)
|
Support
Services
|
10.8
|
Banks
|
9.7
|
Oil
& Gas Producers
|
8.6
|
Pharmaceuticals
& Biotechnology
|
8.5
|
Financial
Services
|
8.5
|
Media
|
7.2
|
Mining
|
6.2
|
|
|
Household Goods
& Home Construction
|
6.2
|
General
Retailers
|
4.7
|
Real
Estate Investment Trusts
|
4.1
|
Nonlife
Insurance
|
3.5
|
Life
Insurance
|
3.4
|
Personal
Goods
|
3.0
|
Food
Producers
|
2.8
|
Industrial
Engineering
|
2.7
|
Travel &
Leisure
|
2.4
|
Tobacco
|
1.7
|
Electronic &
Electrical Equipment
|
1.5
|
Health Care
Equipment & Services
|
1.4
|
Leisure
Goods
|
1.0
|
Net
Current Assets
|
2.1
|
|
-----
|
Total
|
100.0
|
|
=====
|
Country Analysis
|
Percentage
|
United
Kingdom
|
93.6
|
United
States
|
2.8
|
Switzerland
|
1.6
|
Net
Current Assets
|
2.0
|
|
-----
|
|
100.0
|
|
=====
|
Top 10 holdings
|
Fund %
|
Shell
|
6.9
|
AstraZeneca
|
6.9
|
RELX
|
5.4
|
Rio
Tinto
|
5.2
|
3i
Group
|
4.8
|
HSBC
Holdings
|
3.8
|
Phoenix
Group
|
3.4
|
Unilever
|
3.0
|
Segro
|
2.9
|
Mastercard
|
2.8
|
|
|
Commenting
on the markets, representing the Investment Manager
noted:
Performance
Overview:
The
portfolio had returned by 4.83% during the month net of fees,
performing broadly in-line with the FTSE All-Share which returned
by 4.75%.
Market
Summary:
Global equity
markets nudged higher in March as the dovish backdrop set up by the
world's major central banks helped boost risk sentiment.
In
the US, the Federal Reserve (Fed) signalled its inclination to cut
rates, assuaging market concerns by keeping the three rate cuts
pencilled in for the year unchanged, even as it revised up growth
and inflation forecasts. As such, the S&P 500 hit a record high
as investor sentiment continued to remain positive. The economy
added 275,0001
jobs
in February as an uptick in immigration added to labour supply,
enabling the economy to sustain a higher pace of job creation than
estimated.
In
the Eurozone, inflation slowed to 2.6%2
year-over-year in
February, the lowest rate in three months but still above the
European Central Bank's (ECB) target of 2%. The European Central
Bank maintained its interest rates at historically high levels
during its March meeting, as policymakers balanced concerns over a
looming recession with persistently elevated underlying
inflationary pressures.
In
the UK, the Bank of England (BoE)
kept interest rates on hold. The inflation rate fell sharply in
February with headline inflation lower than forecasted at 3.5%, the
lowest rate since 2021, while core inflation fell to 4.5% from
5.1%. The Office for National Statistics reported the consumer
prices index rose by 3.4% in the previous month up from 4%
year-on-year3.
The
FTSE All Share rose 4.75% with Basic Materials, Oil & Gas and
Financials as the top performing sectors.
Stock
comments
Shares in Reckitt
Benckiser performed poorly during the month. The company's results
for 2023 were worse than expected: volume weakness was compounded
by a product recall and an understatement of trade spend in the
Middle East led to a further
shortfall. The news flow deteriorated with an adverse jury ruling
in the US; whilst the company has staunchly defended its position
and intends to appeal, we have seen that litigation can create an
overhang for many months and the shares are likely to remain
optically cheap whilst this remains. Shares in RELX fell back after
previous strength post strong results. Hays was weak during the
month as cyclical concerns on recruitment rose.
3i's
annual update on the performance of Action, the European discount
retailer, provided welcome news on both current trading and its
future prospects. Volume growth continues to exceed expectations as
customers benefit from reinvestment in prices and as the group
continues to open stores in existing and new countries. Margins
remain robust and the group is able both to sustain strong
like-for-likes and growing dividends to its
shareholders.
Next
produced strong financial results and underpinned confidence in the
year ahead with the structural challenges of recent years now
beginning to fade. The Retail channel has become less of a headwind
as competitors have closed stores; Online continues to grow with
recent investments in capacity and capabilities offering
opportunities to expand margins. Phoenix was strong during the month following
better than expected results. The company released better guidance
than expected with more focus on de-leverage which allayed market
concerns.
Changes
During the
period, we purchased a new holding in Weir Group. This is mining
equipment supplier with a well-established installed base which
generates significant aftermarket revenue and profit. The outlook
for mining capex looks reasonable, especially in their key
commodities (copper, gold, iron ore) which should allow OE orders
to improve from a low base. Attractive free-cash-flow generation
and modest valuation (15x P/E FY1 - significant discount to Epiroc,
in-line with Metso) with a robust balance sheet offers a very
attractive risk reward if the company is able to deliver on
mid-to-high single-digit growth and 20% margin.
Our
investment case for Watches of Switzerland has been impacted by several
factors including the weaker-than-expected demand recovery in
China along with the Rolex
acquisition of Bucherer. At this point, we believe there are more
questions than answers for the company, therefore, we have decided
to exit the position.
Reckitt Benckiser
was reduced following the emergence of potential litigation.
Unfortunately, this is an overhang that is likely to persist for
some time and we moderated position to manage this expected
dynamic.
Outlook
Equity markets
entered 2024 in a buoyant mood following a strong and broad rally
in the latter part of 2023. The outlook, and optimism, is a far cry
from 12 months ago, when supply chains were hugely disrupted, and
inflation was double digit and well ahead of central banks' targets
prompting rapid and substantial interest rates hikes despite an
uncertain demand environment. Despite this, equities had one of
their best years on record outperforming bonds with double digit
increases, in dollar terms, across most of the developed world and
some emerging markets. In the US, the Nasdaq was the standout
rising 54% driven by the largest seven companies that rebounded
strongly (+c.70%) after a poor 2022, when they had fallen by 39% as
a group. The FTSE All Share returned by 7.9% in 2023. China was the surprise negative in 2023, with
no noticeable COVID re-opening recovery and lacklustre growth
despite government attempts to stimulate.
As we
pass the first quarter of 2024, markets have shifted to
`goldilocks' territory whereby slowing inflation has signalled the
peak for interest rates while broad macroeconomic indicators that
have been weak are not expected to deteriorate further. This is
also helpful for the cost and availability of credit which has
recently improved having been deteriorating through most of 2023.
During December, bond markets had begun to price in 130bps of
easing in the US and a not dissimilar amount in the UK and
Europe.
We
believed that this quantum of cuts will prove to be overly
aggressive without a significant deterioration in the economy which
we don't expect. That said despite these expectations moderating
significantly during Q1, stock markets have continued to make
progress in the developed world. Labour markets remain resilient
for now with low levels of unemployment while real wage growth is
supportive of consumer demand albeit presenting a challenge to
corporate profit margins.
Notably in 2024,
geopolitics will play a more significant role in asset markets.
This year will see the biggest election year in history with more
than 60 countries representing over half of the world's population,
c.4 billion people, going to the polls. While most, such as the
UK's are unlikely to have globally significant economic or
geopolitical ramifications, others, such as the US elections in
November, could have a material impact. We believe political
certainty may be helpful for the UK and address the UK's elevated
risk premium that has persisted since the damaging Autumn budget of
2022. Whilst we do not position the portfolios for any particular
election outcome, we are mindful of the potential volatility and
the opportunities that may result.
As we
have commented several times before, the UK stock market continues
to remain depressed in valuation terms relative to other developed
markets offering double-digit discounts across a range of valuation
metrics. This valuation `anomaly' saw further reactions from UK
corporates with the buyback yield of the UK, at the end of 2023,
standing at a respectable c.2.5%. Combining this with a dividend
yield of c.4%, the cash return of the UK market is attractive in
absolute terms and comfortably higher than other developed markets.
Although we anticipate further volatility ahead as earnings
estimates moderate, we know that in the course of time risk
appetite will return and opportunities are emerging. As we have
stated in previous commentaries, we have identified a number of
opportunities with new positions initiated throughout the year in
both UK domestic and midcap companies.
We
continue to focus the portfolio on cash generative businesses with
durable, competitive advantages as we believe these companies are
best placed to drive returns over the long-term. Whilst we
anticipate economic and market volatility will persist throughout
the year, we are excited by the opportunities this will likely
create; by identifying the companies that strengthen their
long-term prospects as well as attractive turnarounds
situations.
1Source: Financial
Times, 8 March 2024.
https://www.ft.com/content/c0d37d54-846b-45bf-81fb-3c32d89a8cda
2 Source: Financial
Times, 1 March 2024.
https://www.ft.com/content/25958fcd-14ed-4aa3-8931-5773871fcff8
3Source: Financial
Times, 20 March 2024.
https://www.ft.com/content/9f31261e-7d10-4963-b652-9b96822822bd
23 April 2024