BlackRock Income and Growth Investment Trust Plc - Portfolio Update

BlackRock Income and Growth Investment Trust Plc - Portfolio Update

PR Newswire

LONDON, United Kingdom, July 17

The information contained in this release was correct as at 30 June 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 30 June 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	-3.0%	7.7%	10.0%	18.9%	21.5%	131.2%
Net asset value	-1.5%	3.5%	10.7%	21.3%	29.1%	133.4%
FTSE All-Share Total Return	-1.2%	3.7%	13.0%	23.9%	30.9%	131.0%
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:	215.92p
Net asset value - cum income*:	221.03p
Share price:	197.00p
Total assets (including income):	£48.5m
Discount to cum-income NAV:	10.9%
Gearing:	6.5%
Net yield**:	3.8%
Ordinary shares in issue***:	20,111,789
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.28%
* Includes net revenue of 5.11 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 3.8% and includes the 2023 final dividend of 4.80p per share declared on 21 December 2023 with pay date 15 March 2024, and the Interim Dividend of 2.70p per share declared on 20 June 2024 with pay date 03 September 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.  In addition, the Company's Manager has also agreed to cap ongoing charges by rebating a portion of the management fee to the extent that the Company's ongoing charges exceed 1.15% of average net assets.

 

Sector Analysis	Total assets (%)
Support Services	11.4
Banks	9.3
Pharmaceuticals & Biotechnology	8.4
Financial Services	8.2
Oil & Gas Producers	6.9
Media	6.9
Real Estate Investment Trusts	6.2
Household Goods & Home Construction	5.9
General Retailers	5.8
Mining	5.2
Travel & Leisure	3.2
Industrial Engineering	3.2
Personal Goods	3.2
Nonlife Insurance	3.0
Life Insurance	2.4
Gas, Water & Multiutilities	2.4
Electronic & Electrical Equipment	1.7
Food Producers	1.6
Tobacco	1.3
General Industrials	0.9
Leisure Goods	0.6
Net Current Assets	2.3
	-----
Total	100.0
	=====
Country Analysis	Percentage
United Kingdom	94.0
United States	2.3
Switzerland	1.4
Net Current Assets	2.3
	-----
	100.0
	=====
Top 10 holdings	Fund %
AstraZeneca	7.3
RELX	5.6
Shell	4.9
3i Group	4.6
Rio Tinto	3.9
HSBC Holdings	3.7
London Stock Exchange Group	3.3
Unilever	3.2
Segro	2.8
Reckitt	2.5

 

 

 

Commenting on the markets, representing the Investment Manager noted:

 

Performance Overview:

The Company returned -1.5% during the month net of fees, underperforming the FTSE All-Share which returned -1.2%.

 

Market Summary:

The UK economy grew more strongly than expected in the first half of 2024, though business surveys suggested a slower pace of underlying growth. The labour market continued to loosen but remained relatively tight by historical standards.1

Inflation fell to the Bank of England's (BoE) 2% target for the first time in three years, leading to speculation about potential rate cuts later in the year. The BoE, however, maintained its current policy, awaiting further economic data before making any changes.2

Large caps experienced a period of consolidation in June as the FTSE 100 dropped after peaking in May. The sectors that experienced the most notable underperformance were basic materials and healthcare.

The FTSE 250, which is often seen as a barometer of the UK's broader economic health due to its focus on domestically oriented companies, rose by 2.3% year-to-date, reaching nearly 20,000 points.3

 

 

Stock comments:

Tate & Lyle fell on the announcement of its proposed acquisition of US peer, CP Kelco, a strategically attractive deal but where the uncertainty it introduces combined with the full price being paid is weighing on the shares.

 

Berkeley Group detracted as the shares fell following its full year results announcement. The statement showed resilient current trading, however, highlighted that there are still significant challenges facing the housebuilding sector. Notably, high interest rates and a difficult planning, regulatory and tax backdrop that will put pressure on earnings in future years unless addressed. Hays detracted giving back some of the previous month's gains as staffing markets remain sluggish.

 

3i provided an update on Action during the month reporting the opening of 107 new stores. Despite this expansion, there has been a slight decrease in the year-to-date like-for-like sales growth, now at +9%, compared to the 9.8% growth in Q1 reflecting strong volume growth offset by price deflation as Action passed price reductions on to its customers. Action boasts €825 million in cash reserves and has successfully completed a refinancing of €2.1 billion highlighting the group's strong fiscal management and readiness for future opportunities.

 

RELX performed well in the month on limited newsflow and Rentokil rallied on the news that activist investor, Trian partners, took a significant stake in the pest control company.

 

Changes:

During the month, we started new position in National Grid. We view the recent rights issue, a dividend cut, and a 20% fall in share price as a valuation opportunity with the company's shares now being well-funded for the future. We believe the growing demand for power consumption driven by electrification and AI advancements indicates a significant growth trajectory. We also added to Spirax Sarco as we believe the current share price weakness is a function of cyclical pressures and fails to recognise the quality of this global franchise and the attractive long term returns it offers. and We reduced Tate and Lyle, managing the position size given the CP Kelco deal.

 

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. China was the surprise negative in 2023, with no noticeable COVID re-opening recovery and lacklustre growth despite government attempts to stimulate.

 

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. Despite expectations for rate cuts moderating significantly, 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.

 

With the UK's election date now set for July 4th, we continue to expect that 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 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 will 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, some of which have started to emerge.

 

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 a robust buyback yield of the UK market. Combining this with a dividend yield of 3.7% (FTSE All Share Index yield as at 30 April 2024 source: The Investment Association), 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, we believe that in the course of time risk appetite will return and opportunities are emerging. We have identified a number of potential 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 that we believe offer 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 seeking to identify the companies that strengthen their long-term prospects as well as attractive turnarounds situations.

 

1 ONS 11/06/2024 

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/june2024

2 BOE 19/06/2024 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2024/june-2024

3 FT 30/06/2024 https://markets.ft.com/data/indices/tearsheet/summary?s=FTSM:FSI

 

 

 

 

 

17 July 2024

 

 

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