BlackRock Income Portfolio Update

 
TIDMBRIG 
 
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) 
 
All information is at 31 March 2017 and unaudited. 
 
Performance at month end with net income reinvested 
 
 
 
 
                                     One     Three     One   Three          Since    Five 
                                   Month    Months    Year   Years   1 April 2012   Years 
 
  Sterling 
 
  Share price                       1.5%      6.7%   15.3%  32.1%           79.2%   79.2% 
 
  Net asset value                   1.1%      4.2%   15.7%   32.8%          66.5%   66.5% 
 
  FTSE All-Share Total Return       1.2%      4.0%   22.0%   24.9%          58.7%   58.7% 
 
  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:                                                  199.82p 
 
 Net asset value - cum income*:                                                   201.53p 
 
 Share price:                                                                     198.00p 
 
 Total assets (including income):                                                  GBP53.1m 
 
 Discount to cum-income NAV:                                                         1.8% 
 
 Net gearing:                                                                        2.7% 
 
 Net yield**:                                                                        3.2% 
 
 Ordinary shares in issue***:                                                  25,354,268 
 
 Gearing range (as a % of net assets):                                              0-20% 
 
 Ongoing charges****:                                                                1.0% 
 
 * includes net revenue of 1.71 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 2016 
 final dividend of 3.90p per share declared on 21 December 2016 and paid to 
 shareholders on 10 March 2017 and the 2016 interim dividend of 2.40p per share 
 announced on 29 June 2016 and paid to shareholders on 2 September 2016. 
 
 *** excludes 7,579,664 shares held in treasury. 
 
 **** calculated as a percentage of average net assets and using expenses, 
 excluding finance costs and taxation for the year ended 31 October 2016. 
 
 Sector Analysis                                                         Total assets (%) 
 
 Media                                                                                9.7 
 
 Support Services                                                                     8.1 
 
 Tobacco                                                                              8.0 
 
 Banks                                                                                7.9 
 
 Travel & Leisure                                                                     7.5 
 
 Pharmaceuticals & Biotechnology                                                      7.4 
 
 Financial Services                                                                   6.0 
 
 Oil & Gas Producers                                                                  6.0 
 
 Food Producers                                                                       5.5 
 
 Non-Life Insurance                                                                   4.6 
 
 General Retailers                                                                    4.3 
 
 General Industrials                                                                  3.6 
 
 Mobile Telecommunications                                                            3.2 
 
 Fixed Line Telecommunications                                                        3.2 
 
 Construction & Materials                                                             2.7 
 
 Aerospace & Defence                                                                  2.6 
 
 Food & Drug Retailers                                                                2.3 
 
 Real Estate Investment & Services                                                    1.8 
 
 Chemicals                                                                            1.6 
 
 Household Goods & Home Construction                                                  1.6 
 
 Real Estate Investment Trusts                                                        0.7 
 
 Industrial Engineering                                                               0.5 
 
 Net current assets                                                                   1.2 
 
                                                                                   ------ 
 
 Total                                                                              100.0 
 
                                                                                   ====== 
 
 Ten Largest Equity Investments 
 
 Company                                                                 Total assets (%) 
 
 British American Tobacco                                                             6.9 
 
 Unilever                                                                             5.5 
 
 Lloyds Banking Group                                                                 4.8 
 
 RELX                                                                                 3.9 
 
 Sky                                                                                  3.6 
 
 Royal Dutch Shell 'B'                                                                3.5 
 
 AstraZeneca                                                                          3.4 
 
 Vodafone                                                                             3.2 
 
 BT Group                                                                             3.2 
 
 GlaxoSmithKline                                                                      3.2 
 
Commenting on the markets, Adam Avigdori and Mark Wharrier representing the 
Investment Manager noted: 
 
 
The UK stock market made a positive start to the year. US economic and 
employment data remained supportive as rising inflation and growth expectations 
lead the US Federal Reserve to increase rates by 0.25, as widely expected. The 
combined effect of import-led inflation following sterling weakness and 
stronger oil prices compared to a year ago led to an acceleration in UK prices 
with inflation expectations rising in the UK and Europe. 
 
The market exuberance which greeted the new US administration did fade towards 
the end of the period as President Trump's initial attempts to implement travel 
restrictions and change Obamacare faced obstacles. Sectors that were relatively 
strong included personal goods, tobacco and household goods where corporate 
activity was a major driver of outperformance, whilst the telecommunications, 
oil & gas and utilities sectors underperformed. 
 
The Company has started the year with strong performance, returning 4.2% for 
the quarter and outperforming the FTSE All-Share which returned 4.0% during the 
quarter (figures with income reinvested). 
 
Unilever is one of the largest active positions in the portfolio and was the 
most significant contributor to performance during the quarter after receiving 
a surprise GBP112bn takeover proposal from Kraft, which Unilever rejected. The 
Kraft proposal has prompted Unilever to conduct a strategic review which should 
accelerate shareholder returns from a business which has much potential, 
particularly in the scope to improve margins and cashflow. 
 
Inchcape performed strongly over the quarter driven largely by strong results 
from their Australasia business with the Subaru brand gaining market share. In 
the UK, progress on aftermarket sales has been encouraging, despite the impact 
of Brexit. Europe is also showing pockets of strength. 
 
Another positive contributor was British American Tobacco which agreed terms to 
buy the remainder of the Reynolds American business it does not own.  This 
company continues to generate strong revenue growth and make excellent progress 
on developing new revenue streams from next generation products. 
 
BT Group was the largest detractor from performance. The share price fell after 
the company quantified the impact of a known fraud issue in Italy as 
substantially worse than forecast. In addition, the company highlighted a 
weaker revenue performance in some of its UK business and consequently impacted 
cash flow prospects. Given the recent underperformance the shares look 
attractively valued assuming some alleviation of the regulatory pressures and a 
5% dividend yield. 
 
Over the quarter we have sold our positions in Cineworld Group and Dixons 
Carphone whilst making new purchases in Reckitt Benckiser, a multinational 
consumer goods company and Bodycote, a leading provider in heat treatment 
services that looks to be in a good place to benefit from a cyclical recovery 
in industrial activity. 
 
As ever, we remain believers that over the longer-term earnings and cashflow 
growth tend to be the dominant driver of share prices and where equity markets 
fail to recognise that, corporate buyers have the potential to exploit the 
opportunity; the bid for Unilever this quarter was a good reminder of that 
dynamic as was the bid for both Sky and for ARM Holdings last year. With a 
combination of continued sterling weakness and a low interest rate environment 
fuelling cheap debt, we believe that M&A activity will remain a theme 
throughout the year. 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 cashflow 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. 
 
 
 
20 April 2017 
 
 
 
 
END 
 

(END) Dow Jones Newswires

April 20, 2017 07:05 ET (11:05 GMT)