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

Blackrock Income and Growth Investment TrustAnnouncement

16/05/2025 13:45

The information contained in this release was correct as at 30 April 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 30 April 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                  1.0%       1.3%          10.2%     18.9%        46.6%       141.2%              
 Net asset value              -0.4%      -3.7%         5.6%      18.8%        57.8%       142.9%              
 FTSE All-Share Total Return  -0.2%      -1.2%         7.5%      22.6%        67.9%       145.4%              
                                                                                                              
 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:        218.49p     
 Net asset value - cum income*:         222.51p     
 Share price:                           198.00p     
 Total assets (including income):       £49.0m      
 Discount to cum-income NAV:            11.0%       
 Gearing:                               5.5%        
 Net yield**:                           3.8%        
 Ordinary shares in issue***:           19,334,743  
 Gearing range (as a % of net assets):  0-20%       
 Ongoing charges****:                   1.15%       
 * Includes net revenue of 4.02 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                                10.3              
 Pharmaceuticals & Biotechnology      8.1               
 Financial Services                   6.5               
 Support Services                     6.5               
 Real Estate Investment Trusts        6.4               
 General Retailers                    6.4               
 Oil & Gas Producers                  5.8               
 Software & Computer Services         5.8               
 Nonlife Insurance                    4.3               
 Mining                               4.1               
 Household Goods & Home Construction  3.8               
 Personal Goods                       3.7               
 Tobacco                              3.6               
 Aerospace & Defence                  3.4               
 Media                                2.5               
 Travel & Leisure                     2.3               
 Industrial Engineering               2.2               
 Food Producers                       2.1               
 Life Insurance                       1.7               
 Electronic & Electrical Equipment    1.1               
 General Industrials                  1.0               
 Beverages                            0.7               
 Nonequity Investment Instruments     0.3               
 Net Current Assets                   7.4               
                                      -----             
 Total                                100.0             
                                      =====             
 Country Analysis                     Percentage        
 United Kingdom                       90.4              
 United States                        2.2               
 Net Current Assets                   7.4               
                                      -----             
                                      100.0             
                                                        
 Top 10 Holdings                      Fund %            
 AstraZeneca                          6.6               
 RELX                                 5.8               
 3i Group                             4.3               
 Shell                                4.1               
 Unilever                             3.7               
 British American Tobacco             3.6               
 Lloyds Banking Group                 3.1               
 Admiral Group                        3.1               
 Standard Chartered                   3.1               
 HSBC Holdings                        2.7               
                                                        
                                                        
                                                        

Commenting on the markets, representing the Investment Manager noted:

 

Market Summary:

 

April began with one of the most tumultuous periods in history for financial
markets, as U.S. President Donald Trump announced his reciprocal tariff
strategy on "Liberation Day" on April 2nd. In the 7 days following, the S&P
500 posted its worst day since the pandemic turmoil of March 2020, as well as
its best day since the GFC in 2008. Moreover, the 10yr Treasury yield posted
its biggest weekly jump since 2001, and the 10yr Treasury-bund spread saw its
biggest weekly widening in data going back to German reunification in 1990.
Equity market performance on the day was universally negative, with the S&P500
returning -c.4.8%, Europe's STOXX600 -c.2.7% and MSCI World -c.3.7%, although
the UK stood out as a relative outperformer, with the FTSE All-Share down
'only' -c.1.5% given the UK is only subject to the 10% blanket tariff. The
30yr Treasury yield posted its biggest daily spike since March 2020, flagging
broader concerns about the safety of U.S. assets and their capacity to act as
a haven in times of market stress.

 

President Trump announced a 90-day pause on reciprocal tariffs for
non-retaliating countries a week later. The news saw a relief rally in global
markets, with the sell-off for long-end Treasuries also stabilising in the
U.S., and the 30yr yield came down -2.8bps. The S&P 500 jumped +10% on the
announcement, before selling off c.3% on the following day as an increased
focus on the US-China escalation saw renewed market pressure. The US dollar
and Treasuries also subsequently sold off as banks and investors warned that
Donald Trump's tariffs could tip the US into recession even as the president
stepped back from the initial tariff implementation. The dollar slid against
major trading partner currencies to a more than 20-month low as the rush out
of US assets sent the yen, euro and pound sterling surging. The yield on the
benchmark 10-year US Treasury hit 4.46%, up from 4.17% at the close on April
1, the day before Trump's "liberation day". Whilst equities sold off, gold
prices jumped to an all-time high as investors fled into haven assets.

 

The S&P 500, the Stoxx 600 and the FTSE 100 all saw gains in the final week,
as US Treasury Secretary Bessent said progress was being made towards trade
deals, and the White House confirmed reports that imported autos would not
face additional steel and aluminium tariffs.

 

In the UK, February GDP growth surprised to the upside as the economy expanded
by 0.5%, despite growth forecasts for this year being cut to 0.8% because of
trade disruption and uncertainty caused by U.S. trade tariffs. Positively, the
UK mortgage market saw a notable expansion in low-deposit products, with the
increased availability reflecting lender confidence and improving market
liquidity, though borrowing costs remain elevated. The FTSE All-Share remained
relatively flat for the month despite initial volatility around "liberation
day", returning -0.25%.

 

Stock comment:

 

WH Smith was the top detractor for the month reflecting growing concerns
regarding US passenger numbers and as the market adjusts to the dilutive
impact of the sale of its UK High Street division. A strategically sensible
transaction though at a disappointing valuation. A reduction in the number of
net store openings also disappointed. We still believe that this is an
advantaged retailer with attractive, long-term growth potential driven by
additional space and improving like-for-like trends that is trading at a
relatively low valuation and have added on the weakness.

 

An underweight position in National Grid was the top detractor for the quarter
as a market rotation into defensive shares following the `Liberation Day'
tariff announcements saw the shares up c.7% for the month.

 

Standard Chartered shares sold off significantly following `Liberation Day'.
The bank sector was impacted by heightened macroeconomic and geopolitical
concerns with Standard Chartered and HSBC deemed more vulnerable given their
greater exposure to high tariff economies.

 

3i Group shares rebounded strongly following recent weakness, and the
broad-based `Liberation Day' selloff. Although there was limited company
specific news during the month, the group's largest investment, Action, the
European value retailer, might be one of the beneficiaries of US tariffs if
goods need to be redirected from the US to EU markets.

 

Admiral Group continued to perform well following a strong trading
announcement early in March, and data released in April showed that motor
pricing had remained flat for the month; a material improvement in
month-on-month trends. Motor pricing has been a strong driver of the narrative
for Admiral year-to-date and therefore supported continued strong performance
through the month. The shares also rebounded heavily following the `Liberation
Day' selloff, alongside the broader market.

 

An underweight position in Shell was the third largest contributor for the
month.  Shell struggled in the month due to slumping commodity prices, a weak
outlook for oil markets and the uncertainties stoked by the US
Administration's trade tariffs. The tariff announcements early in the month
caused a slump in global energy prices due to fears that an economic slowdown
would follow.

 

Changes:

 

During the month, we sold our position in Travis Perkins. This follows the
recent and unfortunate departure of the CEO to illness and our concern that
the volatile economic backdrop would make a challenging turnaround situation
even more difficult. We want to focus the portfolio on ideas where we have
higher conviction given the more volatile environment. We added to Taylor
Wimpey and Intermediate Capital.

 

Outlook:

 

Having passed peak interest rates with stable labour markets and broadly
stable macroeconomic conditions, equity markets have performed strongly
through 2024. 2025 has started with a change of market leadership, with
European and UK equity markets outperforming the US. The promise of greater
fiscal spending in China and parts of Europe have served to buoy equity
markets at a time when the US risk appetite appears to be retrenching with
concerns on both on trade, tariffs and fiscal consolidation. The persistency
of this change in market leadership will largely depend on whether
`predictability' returns to US policy, the volatility of which is causing
corporates to continually reassess their strategies towards the world's
largest economy.

 

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 3.8% (FTSE All Share Index yield as at 31 March 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.

 

16 May 2025

 

 Release (https://mb.cision.com/Main/22401/4151730/3454006.pdf)  



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