BlackRock Income Portfolio Update

 
TIDMBRIG 
 
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) 
 
All information is at 31 July 2017 and unaudited. 
 
Performance at month end with net income reinvested 
 
 
 
                                   One    Three     One   Three      Five     Since 
                                 Month   Months    Year   Years     Years   1 April 
                                                                               2012 
 
Sterling 
 
Share price                       2.8%   3.8%     15.6%   34.5%     79.0%     85.6% 
 
Net asset value                   0.8%   2.0%     14.2%   33.4%     71.1%     71.5% 
 
FTSE All-Share Total Return       1.2%   3.0%     14.9%   25.7%     65.0%     62.8% 
 
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:                                       202.91p 
 
Net asset value - cum income*:                                        205.02p 
 
Share price:                                                          202.50p 
 
Total assets (including income):                                       GBP52.8m 
 
Discount to cum-income NAV:                                              1.2% 
 
Gearing:                                                                 3.3% 
 
Net yield**:                                                             3.2% 
 
Ordinary shares in issue***:                                       24,754,268 
 
Gearing range (as a % of net assets)                                    0-20% 
 
Ongoing charges****:                                                     1.0% 
 
 
 
* includes net revenue of 2.11 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 2017 interim dividend of 2.50p per 
share announced on 26 June 2017 to be paid to shareholders on 1 September 
2017. 
 
*** excludes 8,179,664 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 
2016. 
 
 
 
Sector Analysis                                              Total assets (%) 
 
Support Services                                                          8.1 
 
Banks                                                                     7.9 
 
Pharmaceuticals & Biotechnology                                           7.8 
 
Media                                                                     7.4 
 
Tobacco                                                                   7.1 
 
Travel & Leisure                                                          6.3 
 
Oil & Gas Producers                                                       6.2 
 
Financial Services                                                        6.0 
 
Food Producers                                                            5.9 
 
Non-Life Insurance                                                        5.6 
 
General Industrials                                                       4.4 
 
General Retailers                                                         4.3 
 
Construction & Materials                                                  3.4 
 
Industrial Engineering                                                    3.3 
 
Fixed Line Telecommunications                                             3.2 
 
Food & Drug Retailers                                                     2.2 
 
Mobile Telecommunications                                                 2.0 
 
Real Estate Investment & Services                                         1.9 
 
Aerospace & Defence                                                       1.7 
 
Household Goods & Home Construction                                       1.6 
 
Chemicals                                                                 1.5 
 
Real Estate Investment Trusts                                             0.9 
Software & Computer Services                                              0.7 
 
Net Current Assets                                                        0.6 
 
                                                                       ------ 
 
Total                                                                   100.0 
 
                                                                       ====== 
 
 
 
Ten Largest Equity Investments 
 
Company                                                      Total assets (%) 
 
British American Tobacco                                                  6.1 
 
Unilever                                                                  5.9 
 
Lloyds Banking Group                                                      4.8 
 
RELX                                                                      4.2 
 
Royal Dutch Shell 'B'                                                     3.8 
 
Rentokil Initial                                                          3.7 
 
John Laing Group                                                          3.2 
 
BT Group                                                                  3.2 
 
HSBC Holdings                                                             3.1 
 
Shire                                                                     3.0 
 
 
 
Commenting on the markets, Adam Avigdori and David Goldman representing the 
Investment Manager noted: 
 
 
The UK stock market rose in July supported by the mining and banks sectors, 
whilst the tobacco and pharmaceutical sectors performed poorly. The US 
Federal Reserve's ("the Fed") July statement implied that US interest rates 
would continue to rise gradually if economic data remains supportive and the 
Fed would begin to normalise its balance sheet, whilst European economic 
growth continued to improve. UK economic growth was positive, yet weak with 
GDP rising 0.3% in Q2 supported by the services sector with the production 
and construction sectors contracting. Sterling strengthened modestly over the 
month versus the US dollar contributing to share price weakness in companies 
with US sales. 
 
Over the course of the month the BlackRock Income and Growth Investment Trust 
plc ("the Company") has delivered a return of 0.8%, underperforming the FTSE 
All-Share which returned 1.2%. 
 
July is a busy month for corporate earnings with around half of the portfolio 
reporting over the course of the month. The results have been broadly 
positive and it is pleasing to see all top 10 contributors to performance in 
July being driven by companies where we have significant positions. This was 
offset by strong performance in some larger companies that we do not hold, 
particularly in the commodities sector. 
 
Bodycote was the largest contributor to performance in July. A recovery in 
their General Industrial business, growth in Aerospace and Automotive 
revenues and a net cash balance sheet which management are keen to use are 
all driving factors. 
 
Elsewhere in the Industrials space, RPC proved to be another strong 
contributor after a reassuring statement which demonstrated strong organic 
growth, Mergers & Acquisition synergies and a foreign exchange tailwind. 
Additionally, the company is launching a GBP100 million share buyback programme 
which further demonstrates their confidence in the business. 
 
Forterra, a supplier of building products for the UK construction industry, 
continues to perform well and is supported by a strong dynamic for UK brick 
manufacturers as sterling's weakness limits imports. The shares trade on a 
low Price-to-Earnings multiple and deliver a high free cash flow yield. 
 
Our underweight position in mining names, including Glencore and BHP 
Billiton, detracted from performance in July as commodities performed well. 
We continue to have concerns in the mining industry regarding the volatility 
in Chinese demand. There are also signs that the industry will need to enter 
into the next phase of capital expenditure investment which will bring cash 
flow under strain. We remain comfortable not holding these names in the 
portfolio. 
 
An underweight position in HSBC also detracted from overall performance after 
the bank posted strong results with revenue ahead of expectations. Although 
costs were also higher than expectations, HSBC has seen accelerating loan 
growth driven by its Asian commercial business and UK and Hong Kong 
mortgages. 
 
We continue to run a flexible and concentrated portfolio with competition for 
capital ensuring we only hold the highest conviction positions. In this 
regard we have added new positions in Weir, who we see benefiting from the 
growth in the shale industry, and in Accesso Technologies, who are developing 
innovative technology that is increasing customer spend for their clients. 
Over the course of the month we have exited our position in Aggreko, reduced 
our position in AstraZeneca and added to Wolseley, Shire, Babcock and 
Bodycote. 
 
We see increasing pressure in the UK consumer space as rock bottom household 
savings are coupled with rising household debt levels. Whilst we remain 
cautious in this area, we certainly do not treat all companies equally. By 
focusing on those companies that can generate cashflow from strong business 
models, have strong balance sheets or scope for management driven self-help, 
we are able to access some of the fantastic domestic opportunities starting 
to emerge. 
 
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, corporates buyers have the potential to 
exploit the opportunity. With a combination of continued sterling weakness 
and a low rate environment fuelling cheap debt, we believe that Mergers & 
Acquisition activity will remain a theme throughout the year. 
 
 
15 August 2017 
 
 
 
END 
 

(END) Dow Jones Newswires

August 15, 2017 10:13 ET (14:13 GMT)