REG-BlackRock Income and Growth Investment Trust Plc: Portfolio Update

Blackrock Income and Growth Investment TrustAnnouncement

17/03/2025 13:15

The information contained in this release was correct as at 28 February 2025.
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 28 February 2025 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                  2.3%       5.8%          16.6%     26.1%        38.0%       143.6%              
 Net asset value              0.0%       3.9%          17.1%     25.5%        48.8%       152.1%              
 FTSE All-Share Total Return  1.3%       5.7%          18.4%     27.7%        53.4%       151.6%              
                                                                                                              
 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:        229.31p     
 Net asset value - cum income*:         230.97p     
 Share price:                           200.00p     
 Total assets (including income):       £48.9m      
 Discount to cum-income NAV:            13.4%       
 Gearing:                               7.4%        
 Net yield**:                           3.8%        
 Ordinary shares in issue***:           19,459,823  
 Gearing range (as a % of net assets):  0-20%       
 Ongoing charges****:                   1.15%       
 * Includes net revenue of 1.66 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 Interim Dividend of 2.70p per share declared on 20 June 2024 with pay date 29 August 2024 and the 2024 final dividend of 4.90p per share declared on 07 January 2025 with pay date 14 March 2025. 
 *** 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 2024. 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 (%)  
 Banks                                13.5              
 Media                                8.4               
 Support Services                     8.3               
 Pharmaceuticals & Biotechnology      7.8               
 Oil & Gas Producers                  6.6               
 General Retailers                    5.9               
 Real Estate Investment Trusts        5.5               
 Financial Services                   5.3               
 Mining                               5.3               
 Nonlife Insurance                    4.1               
 Nonequity Investment Instruments     3.9               
 Industrial Engineering               3.7               
 Personal Goods                       3.4               
 Tobacco                              2.9               
 Household Goods & Home Construction  2.8               
 Travel & Leisure                     2.8               
 Gas, Water & Multiutilities          2.1               
 Food Producers                       2.0               
 Life Insurance                       1.5               
 Electronic & Electrical Equipment    1.3               
 General Industrials                  1.1               
 Beverages                            0.5               
 Net Current Assets                   1.3               
                                      -----             
 Total                                100.0             
                                      =====             
 Country Analysis                     Percentage        
 United Kingdom                       96.3              
 United States                        2.4               
 Net Current Assets                   1.3               
                                      -----             
                                      100.0             
                                                        
 Top 10 Holdings                      Fund %            
 AstraZeneca                          7.1               
 RELX                                 5.5               
 HSBC Holdings                        5.0               
 Shell                                4.4               
 Standard Chartered                   4.2               
 3i Group                             4.0               
 Rio Tinto                            3.9               
 Unilever                             3.5               
 Lloyds Banking Group                 3.4               
 Pearson                              3.3               
                                                        

Commenting on the markets, representing the Investment Manager noted:

 

Market Summary

February started with the announcement that President Trump was imposing 25%
tariffs on all imports from Canada and Mexico, along with additional 10%
tariffs on all imports from China. Following the announcement, there was a
broad-based move lower in risk assets across Europe, with eurozone large caps
down 1.6% and UK large caps, a market where the tariff rhetoric has been
softer, down 1.2%. The imposition on Canada and Mexico was later delayed,
which allowed some stability to return after a volatile start to the month.

 

In the US, equity indices closed lower in February. Headline CPI rose 0.5%
month-on-month for January, which has reinforced the Federal Reserve's
cautious stance on cutting rates through the year. Doubts about the strength
of the US consumer also led to a risk-off move in markets towards the end of
February, leading to a drop in the S&P 500. The index closed the month -1.3%
as the risk-off sentiment dominated the market and softer economic readings
worried investors. Technology and Consumer Discretionary were the hardest hit
as the Nasdaq dropped, led by falls in some of the world's largest technology
companies.

 

In the UK, large caps have benefited from being relatively shielded from
tariff discussions and the market's low-technology exposure, as the FTSE 100
ended +2%, and the FTSE All-Share +1.3% versus broad selloffs in U.S.
equities. The Bank of England struck a dovish tone with a 25bps rate cut
halfway through February, as the Governor Andrew Bailey pointed to the UK
economy's stagnation, despite a slightly stronger fourth quarter of 2024 for
Gross Domestic Product. The move was highly anticipated by markets, but the
7-2 vote split did provide a mild surprise, with two members voting for a
larger 50bps cut. Inflation data surprised to the upside for January, rising
3% against expectations of 2.8% year-on-year, its highest in 10 months. The
increase was driven largely by a smaller-than-usual drop in air fares in
December, and the implementation of VAT on private school fees. The economy
also grew in Q4 2024, up 0.1%, defying expectations of a contraction.

 

Stock comment

Tate & Lyle detracted as its 2024 results highlighted the subdued market
backdrop for the food manufacturers leading to modest earnings downgrades. WH
Smith and Spirax Group struggled during the month despite limited newsflow.
The underweight to Aerospace & Defence detracted from performance following
significant upgrades at Rolls Royce and growing excitement in the defence
names given pressure on Europe to materially increase its defence spending.

 

The banks exposure in the Company contributed positively to performance
following strong updates from Standard Chartered and Lloyds which highlighted
the strong fundamentals while valuations remain undemanding. Standard
Charterer's results for 2024 showed strong revenue growth combined with good
cost control. Although there is still an overhang at Lloyds from motor
commission litigation, the 2024 results impressed with strong capital
generation supported by the tailwind stemming from rate increases of the last
few years. Admiral performed well during the month ahead of its 2024 results
announcement while not owning Diageo contributed to relative performance, in
part due to rising tariff-related concerns.

 

Changes

Trading activity during the month was focused on increasing the BP holding to
reflect the strategy shift and acceleration that is underway and that has the
potential to address the company's leverage position and capital allocation.
This was funded out of Shell. We also increased the Lloyds holding to reflect
the combination of an attractive returns profile over the next 24 months with
a subdued valuation given the overhang from ongoing motor commission
litigation. This was funded out of NatWest.

 

Outlook

Global developed equity markets continued their broad rallies throughout 2024
following a trend that started in late 2023.  Having passed peak interest
rates with stable labour markets and broadly stable macroeconomic conditions,
equity markets have performed strongly. The promise of greater fiscal spending
in the US, China and parts of Europe have served to buoy equity markets
further despite contributing to rising government bond yields as the spectre
of uncontrolled fiscal deficits and inflationary pressures loom large for bond
investors.

 

Following a period of extended economic weakness, the Chinese Government has
begun a more concerted campaign aimed at accelerating economic growth and
arresting deflationary pressures. Recent policy moves have sought to improve
and encourage lending into the real economy with a sizable fiscal easing
programme announced. Whilst the scale of the easing is large, western markets
and commentators have remained sceptical of its impact and effectiveness
whilst awaiting evidence to the contrary. In the UK, the recent budget
promised and delivered a large-scale borrowing and spending plan. Whilst
sizable increases in minimum wage and public sector wage agreements likely
support a brighter picture for the UK consumer, business confidence remains
low impacting the growth outlook. UK labour markets remain resilient for now
with low levels of unemployment while real wage growth is supportive of
consumer demand albeit presents a challenge to corporate profit margins.

 

With the UK's election and budget now over, the market's attention will focus
on the subsequent policy actions of the new US administration under Donald
Trump. The global economy has benefited from the significant growth and
deflation `dividend' it has received from globalisation over the past decades.
The impact of a more protectionist US approach and the potential
implementation of tariffs may challenge this `dividend'. Indeed, we anticipate
more uncertainty given the announcements of significant federal budget cuts
and a stricter immigration policy. We would anticipate asset markets to be
wary of these policies until there is more clarity as we move through 2025.
Conversely, we believe political certainty, now evident in the UK, 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 portfolio for any election or geopolitical 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 very 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 who continue to use their excess cashflows to fund buybacks
contributing to a robust buyback yield of the UK market. Combining this with a
dividend yield of 3.6% (FTSE All Share Index yield as at 28 February 2025;
source: Bloomberg), the cash return of the UK market is attractive in absolute
terms and higher than other developed markets. Although we anticipate further
volatility ahead, we believe that risk appetite will return and opportunities
are emerging. We have identified several 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
turnaround situations.

 

17 March 2025

 

ENDS

 

 Release (https://mb.cision.com/Main/22401/4119815/3324569.pdf)  



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