BlackRock Income Portfolio Update

 
TIDMBRIG 
 
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC 
 
All information is at 30 September 2016 and unaudited. 
 
Performance at month end with net income reinvested 
 
 
 
                                    One     Three     One   Three      Since     Five 
                                  Month    Months    Year   Years    1 April    Years 
                                                                        2012 
 
Sterling 
 
Share                              1.1%   11.4%     11.2%  31.8%       66.8%    79.2% 
price 
 
Net asset                          0.9%    8.5%     11.6%   34.8%      55.7%    79.0% 
value 
 
FTSE All-Share Total               1.7%    7.8%     16.8%   21.1%      46.8%    68.9% 
Return 
 
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:                                       188.24p 
 
 
Net asset value - cum income*:                                        192.20p 
 
 
Share price:                                                          188.00p 
 
 
Total assets (including income):                                       GBP51.4m 
 
 
Discount to cum-income NAV:                                              2.2% 
 
 
Net gearing:                                                             2.6% 
 
 
Net yield**:                                                             3.2% 
 
 
Ordinary shares in issue***:                                       25,679,268 
 
 
Gearing range (as a % of net assets)                                    0-20% 
 
 
Ongoing charges****:                                                     1.2% 
 
 
 
 
* includes net revenue of 3.96 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 3.2% and includes the 2015 
final dividend of 3.60p per share declared on 15 January 2016, paid to 
shareholders on 4 March 2016 and the 2016 interim dividend of 2.40p per share 
announced on 29 June 2016 and paid to shareholders on 2 September 2016. 
 
*** excludes 7,254,664 shares held in treasury 
 
**** Calculated as a percentage of average net assets and using expenses, 
excluding performance fees and interest costs for the year ended 31 October 
2015. 
 
 
 
Sector Analysis                                   Total assets (%) 
 
Pharmaceuticals & Biotechnology                         10.4 
 
Travel and Leisure                                      9.4 
 
Tobacco                                                 8.8 
 
Media                                                   8.6 
 
Support Services                                         7.3 
 
Financial Services                                      6.4 
 
Banks                                                   6.1 
 
Oil & Gas Producers                                     5.8 
 
Food Producers                                          5.3 
 
General Retailers                                       4.7 
 
General Industrials                                     4.2 
 
Fixed Line Telecommunication                            4.1 
 
Wireless Telecommunication Services                     3.5 
 
Non-Life Insurance                                      3.2 
 
Food & Drug Retailers                                   2.4 
 
Construction & Materials                                2.3 
 
Aerospace & Defence                                     2.2 
 
Real Estate Investment & Services                       2.0 
 
Real Estate Investment Trusts                           1.2 
 
Chemicals                                               0.7 
 
Net Current Assets                                       1.4 
 
Total                                                  100.0 
 
 
 
 
Ten Largest Equity Investments 
 
Company                                           Total assets (%) 
 
British American Tobacco                                6.3 
 
Unilever                                                5.3 
 
AstraZeneca                                             5.2 
 
BT Group                                                4.1 
 
RELX                                                    3.8 
 
Vodafone                                                3.6 
 
John Laing Group                                        3.4 
 
Sky                                                     3.4 
 
Royal Dutch Shell 'B'                                   3.3 
 
Lloyds Banking Group                                    3.2 
 
 
 
 
Commenting on the markets, Adam Avigdori and Mark Wharrier representing the 
Investment Manager noted: 
 
The rally in the UK equity market post the referendum result has surprised a 
number of commentators.  After the initial market setback on the vote, the 
market strengthened throughout the summer and generated a return of 7.8% 
during the quarter.  Whilst the process of extracting Britain from the 
European Union has only just begun, it remains important to emphasise the 
global nature of the UK stock market which continues to provide opportunities 
to invest in companies which demonstrate sustainable competitive advantages. 
 
During the quarter the Company returned +8.5%, whilst the FTSE All Share 
Index returned +7.8%. 
 
While the Company essentially kept pace with the strong market rise during 
the quarter, performance was highly stock specific. The position in ARM 
Holdings was the largest contributor to performance following the agreed GBP 
24bn bid for the company from Japanese company, Softbank. The Company held a 
2% position in ARM Holdings ahead of the bid.  Despite having a low dividend 
yield, we have continued to hold ARM Holdings given its attractive cash flow 
characteristics, the long duration qualities of customer licenses and secular 
growth. Softbank have also been attracted to these qualities. John Laing 
Group was also a strong contributor and is a good example of a company that 
continues to drive growth through active management, even if the wider macro 
environment has challenges.  This investor and manager of infrastructure 
assets produced encouraging interim results during the month, demonstrating 
net asset value growth of its portfolio of 8% which is struck using a 
conservative discount rate of over 9%. The pipeline of potential 
infrastructure investments is healthy and management continues to recycle the 
portfolio to enhance longer term returns for shareholders. 
 
The mining sector, where we do not have any positions, continued to be a 
headwind to performance during the quarter.  Whilst the outlook for Emerging 
Markets and commodity demand has improved, we prefer exposure through less 
capital intensive companies such as Inchcape and British American Tobacco. 
 
During the period we added to positions in more domestic companies where 
share prices have been impacted by recent market volatility including Sky, 
Tesco and Hays and sold the positon in Intertek.  Like Arm Holdings, Intertek 
has served the Company well and we feel the current valuation now reflects 
longer term growth prospects.  We also established new positions in BAE 
Systems and Kier Group.  After many years of depressed defence spending, 
budgets across the developed world, particularly in the US, are slowly 
recovering. Kier Group is a contractor focussing on roads and social housing, 
both areas with potential upside should the government seek to stimulate the 
economy through fiscal measures. 
 
Macroeconomic volatility has been an important driver of equities so far this 
year which has tended to overwhelm the stock specific factors at the heart of 
our process.  However, over the longer term, earnings and cash flow growth 
tend to be the dominant driver of share prices.  If equity markets fail to 
recognise that, corporates buyers have the potential to; the bid for ARM 
Holdings during the quarter was a good reminder of that dynamic.  Markets are 
likely to remain skittish given macro headwinds, likely volatility in bond 
markets and an increasing level of political risks.  However, we continue to 
find opportunities in those companies that can generate cash flow from strong 
business models, have favourable industry characteristics or scope for 
management driven self-help.  While sometimes unnerving, we will continue to 
use market volatility to provide buying opportunities in those types of 
companies. 
 
* NAV - Inc. performance. 
 
17 October 2016 
 
 
 
END 
 

(END) Dow Jones Newswires

October 17, 2016 11:08 ET (15:08 GMT)