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

Blackrock Income and Growth Investment TrustAnnouncement

18/06/2025 12:00

The information contained in this release was correct as at 31 May 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 31 May 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                  3.5%       2.5%          4.8%      28.6%        53.7%       149.7%              
 Net asset value              3.8%       0.0%          6.4%      23.1%        58.0%       152.2%              
 FTSE All-Share Total Return  4.1%       1.5%          9.4%      26.8%        69.0%       155.5%              
                                                                                                              
 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:        226.00p     
 Net asset value - cum income*:         231.07p     
 Share price:                           205.00p     
 Total assets (including income):       £50.5m      
 Discount to cum-income NAV:            11.3%       
 Gearing:                               8.4%        
 Net yield**:                           3.7%        
 Ordinary shares in issue***:           19,264,743  
 Gearing range (as a % of net assets):  0-20%       
 Ongoing charges****:                   1.15%       
 * Includes net revenue of 5.07 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                                10.6              
 Support Services                     7.4               
 Pharmaceuticals & Biotechnology      7.4               
 General Retailers                    6.6               
 Financial Services                   6.2               
 Real Estate Investment Trusts        6.2               
 Oil & Gas Producers                  5.5               
 Software & Computer Services         5.3               
 Nonequity Investment Instruments     5.0               
 Nonlife Insurance                    4.1               
 Mining                               3.9               
 Household Goods & Home Construction  3.7               
 Aerospace & Defence                  3.5               
 Personal Goods                       3.4               
 Tobacco                              3.4               
 Travel & Leisure                     2.5               
 Industrial Engineering               2.4               
 Life Insurance                       2.2               
 Media                                2.0               
 Food Producers                       1.6               
 Electronic & Electrical Equipment    1.0               
 General Industrials                  1.0               
 Beverages                            0.6               
 Net Current Assets                   4.5               
                                      -----             
 Total                                100.0             
                                      =====             
 Country Analysis                     Percentage        
 United Kingdom                       92.4              
 United States                        3.1               
 Net Current Assets                   4.5               
                                      -----             
                                      100.0             
                                                        
 Top 10 Holdings                      Fund %            
 AstraZeneca                          6.8               
 RELX                                 5.5               
 3i Group                             4.0               
 Shell                                4.0               
 Unilever                             3.6               
 British American Tobacco             3.5               
 Lloyds Banking Group                 3.5               
 Standard Chartered                   3.5               
 London Stock Exchange Group          2.8               
 Admiral Group                        2.8               

 

Commenting on the markets, representing the Investment Manager noted:

 

Market Summary:

May was a strong month for global financial markets, marked by a rebound in
risk sentiment and easing geopolitical tensions as investors priced out the
likelihood of a global downturn.

 

The month opened with the Federal Reserve maintaining its policy rate, citing
persistent uncertainty. Chair Powell reiterated a cautious stance stemming
from the `dual threat' of persistent inflation and rising unemployment data.
U.S. Treasuries also came under pressure; a Moody's downgrade and concerns
over the fiscal outlook pushed the 30-year yield to an intraday high of 5.15%.

 

In contrast, the Bank of England cut rates again, citing progress on domestic
disinflation, with twelve-month CPI falling to 2.6% in March from 2.8% in
February and a slowing of wage growth expected over the rest of the year. This
also reflects the Bank's growing concern over the secondary impact of U.S.
tariffs on UK export performance and broader financial stability, as they
signalled further gradual cuts to come. However, optimism around monetary
easing was short-lived as data revealed that inflation surprised to the upside
in April, rising to 3.5% YoY-driven by regulated price hikes in water, gas and
electricity alongside wage increases-marking the first time inflation exceeded
3% since March 2024. The UK was the weakest major performing equity market in
the month, with the FTSE All-Share rising c.4.1%. Consumer staples, healthcare
and utilities were notable laggards, and UK-listed pharmaceutical companies
came under pressure following Trump's drug pricing reforms, which threaten
revenue from U.S. sales.

 

Despite the macroeconomic noise, U.S. equities posted a solid monthly
performance as equity markets surged, led by the U.S., where the S&P 500
posted a +6.3% gain-its best monthly performance since November 2023. The
rally was driven by stronger-than-expected economic data, a de-escalation in
U.S.-China trade tensions, and robust Q1 earnings, particularly from tech
giants like Nvidia. The information technology and healthcare sectors
outperformed, but the rally extended to cyclical sectors such as industrials
and consumer discretionary.

 

Some notable headlines around tariff negotiations also boosted market
sentiment, as markets welcomed a 90-day mutual tariff reduction between the
U.S. and China, which helped lift U.S. equities by c.3% on the day.
Additionally, the UK became the first country to secure a trade deal with the
U.S., which retains key U.S. tariffs on UK goods but offers improved market
access in some sectors. Toward month-end, a U.S. court ruling challenged the
legality of Trump-era tariffs, sparking another rally in risk assets, though
the decision is under appeal and the outcome remains uncertain.

 

Stock comment:

There were a number of detractors to performance for the month, including
names that we are underweight or do not own such as Rolls-Royce and Glencore,
that performed well. Rolls-Royce continues to benefit from the European
aerospace and defence rally that started earlier this year, which was driven
higher by escalating tensions between Russia and Ukraine, and expectations for
the upcoming NATO summit in June.

 

3i Group was the top detractor to performance after an IT upgrade led to a
temporary slowdown in like-for-like growth deceleration in their discount
retail stores Action for the 2025 period so far. We believe this remains a
competitively advantaged business with a long runway of growth.

 

RELX struggled as continued dollar weakness remains a headwind for revenues.
There have been some concerns that US government scientists would be banned
from publishing in the world's leading medical journals, which has led to
weakness in the shares through the month. The company has a very small
exposure to US Federally funded articles.

 

WH Smith shares rebounded strongly this month, recovering some of the losses
from April's Liberation Day-driven selloffs. The company also benefitted from
stronger-than-expected Europe to US passenger data as passengers rebounded to
+12% in April, after a -17% decline in March. The upcoming exit from their
High Street division in June also brings a cleaner equity story mid-term with
higher growth and margins, which has been a tailwind to the shares through the
month.

 

Howdens was a top contributor for the month, as the trading environment in the
UK continues to improve; Topps Tiles saw trade sales +12%. The company also
reported a trading update for the period to April, with the company noting
that it has seen a positive start to the year.

 

Great Portland Estates delivered better than expected FY25 results with
Management upgrading their guidance on accelerating rental growth. Management
have upgraded their FY26 rent growth guidance to 4-7% and are ahead of target
having deployed the capital they raised last year from the rights issue into
high quality developments as they take advantage of a supply constrained
market at a cyclical trough and committing at a 53% discount to replacement
cost. With 40% of the book under development, the company is on track to
deliver significant value in our opinion. The shares have recovered from the
incredible 50% discount to NAV they hit a few months back, but at 35% discount
they remain significantly undervalued if you believe like we do that NAV can
grow meaningfully.

 

Changes:

During the month, we bought Bellway and reduced Taylor Wimpey given the
stronger stock-specific story at Bellway. We believe Bellway will likely
benefit from a modestly healthy housing and regulation backdrop through the
year.

 

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.

 

18 June 2025

 

ENDS

 

 Release (https://mb.cision.com/Main/22401/4166056/3513007.pdf)  



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