BlackRock Income Portfolio Update

 
TIDMBRIG 
 
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) 
 
All information is at 31 July 2018 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                      -0.2%     5.9%    4.5%  22.9%      50.5%     94.0% 
 
Net asset value                   0.9%     3.9%    7.9%   24.5%     55.5%     85.0% 
 
FTSE All-Share Total Return       1.3%     3.9%    9.2%   30.2%     44.9%     77.7% 
 
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:                                       211.93p 
 
Net asset value - cum income*:                                        214.34p 
 
Share price:                                                          205.00p 
 
Total assets (including income):                                       GBP56.0m 
 
Discount to cum-income NAV:                                              4.4% 
 
Gearing:                                                                 3.3% 
 
Net yield**:                                                             3.2% 
 
Ordinary shares in issue***:                                       24,258,268 
 
Gearing range (as a % of net assets)                                    0-20% 
 
Ongoing charges****:                                                     1.1% 
 
 
 
* includes net revenue of 2.41 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 2017 
final dividend of 4.10p per share declared on 20 December 2017 and paid to 
shareholders on 9 March 2018 and the 2018 interim dividend of 2.50p per share 
declared on 25 June 2018 and payable to shareholders on 3 September 2018. 
 
*** excludes 8,675,664 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 
2017. 
 
 
 
Sector Analysis                                              Total assets (%) 
 
Oil & Gas Producers                                                      10.3 
 
Banks                                                                     9.6 
 
Pharmaceuticals & Biotechnology                                           8.8 
 
Support Services                                                          6.6 
 
Tobacco                                                                   6.4 
 
Financial Services                                                        6.0 
 
Food Producers                                                            5.4 
 
Media                                                                     5.0 
 
Life Insurance                                                            4.8 
 
Non-life Insurance                                                        4.2 
 
Industrial Engineering                                                    3.7 
 
Construction & Materials                                                  3.4 
 
General Retailers                                                         3.2 
 
Household Goods & Home Construction                                       3.1 
 
Food & Drug Retailers                                                     3.0 
 
General Industrials                                                       2.9 
 
Travel & Leisure                                                          2.4 
 
Gas, Water & Multiutilities                                               2.1 
 
Forestry & Paper                                                          1.9 
 
Chemicals                                                                 1.4 
 
Software & Computer Services                                              0.9 
 
Electronic & Electrical Equipment                                         0.8 
 
Net Current Assets                                                        4.1 
 
                                                                       ------ 
 
Total                                                                   100.0 
 
                                                                       ====== 
 
 
 
Ten Largest Equity Investments 
 
Company                                                      Total assets (%) 
 
Royal Dutch Shell 'B'                                                     5.9 
 
British American Tobacco                                                  5.4 
 
RELX                                                                      3.9 
 
Unilever                                                                  3.9 
 
Lloyds Banking Group                                                      3.7 
 
John Laing Group                                                          3.5 
 
BP Group                                                                  3.5 
 
GlaxoSmithKline                                                           3.3 
 
AstraZeneca                                                               3.3 
 
Ferguson                                                                  3.1 
 
 
 
Commenting on the markets, Adam Avigdori and David Goldman representing the 
Investment Manager noted: 
 
 
The UK equity market recorded another positive month during July returning 
1.3%, although it underperformed global equities. Politics once again took 
centre stage in the UK with changes in Theresa May's cabinet. Firstly, Brexit 
Secretary David Davis resigned over the Chequers agreement and soon after 
Foreign Secretary Boris Johnson stepped down, criticising the Prime 
Minister's Brexit strategy. Despite instability within the party, the Prime 
Minister was able to win crucial votes on customs and trade bills, however 
renewed Brexit concerns and subdued wage growth data in the UK was enough to 
weigh on Sterling during the month. U.S. President Donald Trump and European 
Commission president Jean-Claude Juncker vowed to lower or scrap tariffs 
related to non-auto industrial goods and work to reform World Trade 
Organization rules to address unfair trade practices. The mining and oil & 
gas sectors performed poorly as ongoing concerns around trade wars led to 
further weakness in commodity prices. Dollar strength or Sterling weakness, 
saw a number of overseas earners perform well, whilst small and mid-caps 
underperformed large caps given the higher international exposure of the FTSE 
100. 
 
Over the month the BlackRock Income and Growth Investment Trust delivered a 
return of 0.9%, underperforming the FTSE All-Share which delivered a return 
of 1.3%. 
 
TP ICAP shares have fallen significantly following a disappointing statement. 
The recent market volatility we have been seeing has failed to come through 
to revenue growth for TP ICAP as was expected, but the real issues are on the 
cost side. The expectations for cost saving synergies have been revised 
downwards and interest and broker compensation costs are increasing. Inchcape 
suffered as a slowdown in pre-registration activity put pressure on new and 
used car margins in the UK. Strength across parts of Europe helped to offset 
declines in the UK, but this wasn't enough to put the brakes on the 
challenging back-drop for new car vehicle margins. Inchcape's distribution 
business remains a high-quality business with a net cash balance sheet and 
modest growth expectations. Rentokil's results were in line with expectations 
in that they delivered a modest slowdown in organic growth due to the 
continued impact of last year's hurricanes on Puerto Rico as well as the cold 
weather in March and April delaying the pest season. M&A continues to 
contribute to revenue and profit growth. 
 
John Laing, one of the largest contributors for the month, highlighted an 
exciting pipeline of investments for the second half of the year which 
reinforces our positive view of the business. With the shares trading at a 
10% discount to net asset value, we believe there is an attractive 
risk-reward on offer. DS Smith results demonstrated strong organic growth of 
5.2% with further market share gains. Additionally, margins are improving as 
the cost recovery lag starts to work through the financial statements. 
British American Tobacco released reassuring results with the US business 
beating expectations and delivering improved profit margins. The business is 
generating good cash flow and the FX headwinds are easing. 
 
During the month we purchased a new position in Associated British Food and 
Phoenix Group Holdings. Additionally, we have added to positions in United 
Utilities, De La Rue, Diversified Oil & Gas and GlaxoSmithKline. We have 
reduced exposure to Wier Group, Rentokil, Next and TP ICAP and have sold our 
holdings in ITV, Direct Line and BT Group. 
 
We are broadly constructive on global markets and expect a continuation of 
the global growth that we have seen over the last few years, albeit in a less 
synchronised fashion across the G7 nations as this year brings more political 
and economic uncertainty. The trend of steady growth has provided a solid 
backdrop for equity market returns, which have also been helped by loose 
financial conditions from supportive governments and central banks. However, 
political uncertainty is rising, which combined with tightening financial 
conditions, means that we expect volatility to return to markets. This 
provides us, as active managers of a concentrated portfolio, with a great 
opportunity to identify high-quality cash generative businesses, with robust 
balance sheets, that can weather various market cycles and help to deliver 
long term capital and income growth for our clients. 
 
We continue to like cash generative consumer staple companies, especially 

those exposed to the emerging market consumer given the prevalent demographic 
trends in certain markets. These companies often generate substantial cash 
flow which allows them to invest in innovation, marketing and distribution to 
ensure the longevity of their brands while also paying attractive and growing 
dividends to shareholders. We have also sought exposure to infrastructure and 
construction spend, which remains well below long-term averages and 
initiatives to boost this spend features prominently in politicians' 
manifestos, particularly in the US and Europe. We also note that inflationary 
pressures are starting to build and therefore we seek those companies with 
sufficient pricing power and efficiency potential to withstand rising costs. 
As the last few months have demonstrated, it is crucial to be selective and 
to focus on those companies that are strong operators, that provide a 
differentiated service or product and that boast a strong balance sheet. 
 
17 August 2018 
 
 
 
END 
 

(END) Dow Jones Newswires

August 17, 2018 09:30 ET (13:30 GMT)