BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
(LEI:5493003YBY59H9EJLJ16)
All information is at 31 March 2019 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 | -0.8% | 7.6% | 1.4% | 15.3% | 32.1% | 79.2% |
| Net asset value | 2.4% | 10.3% | 4.5% | 21.3% | 39.2% | 74.5% |
| FTSE All-Share Total Return | 2.7% | 9.4% | 6.4% | 31.3% | 34.5% | 70.9% |
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: | 195.20p |
| Net asset value - cum income1: | 197.63p |
| Share price: | 185.00p |
| Total assets (including income): | £51.3m |
| Discount to cum-income NAV: | 6.4% |
| Gearing: | 1.3% |
| Net yield2: | 3.7% |
| Ordinary shares in issue3: | 23,936,950 |
| Gearing range (as a % of net assets) | 0-20% |
| Ongoing charges4: | 1.1% |
1 Includes net revenue of 2.43 pence per share.
2 The Company’s yield based on dividends announced in the last 12 months as at the date of the release of this announcement is 3.7% and includes the 2018 final dividend of 4.40p per share declared on 20 December 2018 and paid to shareholders on 19 March 2019 and the 2018 interim dividend of 2.50p per share declared on 25 June 2018 and paid to shareholders on 3 September 2018.
3 excludes 8,996,982 shares held in treasury.
4 Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 31 October 2018.
| Sector Analysis | Total assets (%) |
| Oil & Gas Producers | 11.3 |
| Pharmaceuticals & Biotechnology | 7.9 |
| Household Goods & Home Construction | 7.0 |
| Life Insurance | 7.0 |
| Banks | 6.6 |
| Food Producers | 6.6 |
| Media | 6.6 |
| Financial Services | 6.5 |
| Support Services | 5.5 |
| Tobacco | 5.1 |
| Travel & Leisure | 3.9 |
| Food & Drug Retailers | 3.9 |
| Mining | 3.4 |
| Industrial Engineering | 2.9 |
| Gas, Water & Multi-utilities | 2.4 |
| Nonlife Insurance | 2.4 |
| Mobile Telecommunications | 1.5 |
| Construction & Materials | 1.0 |
| Electronic & Electrical Equipment | 0.9 |
| Chemicals | 0.5 |
| Personal Goods | 0.5 |
| Net Current Assets | 6.6 |
| ------ | |
| Total | 100.0 |
| ==== |
| Ten Largest Equity Investments | |
| Company | Total assets (%) |
| Royal Dutch Shell 'B' | 6.5 |
| Reckitt Benckiser | 4.2 |
| RELX | 4.2 |
| British American Tobacco | 4.1 |
| GlaxoSmithKline | 4.0 |
| AstraZeneca | 3.9 |
| Tesco | 3.9 |
| Unilever | 3.9 |
| BP Group | 3.8 |
| Prudential | 3.7 |
Commenting on the markets, Adam Avigdori and David Goldman representing the Investment Manager noted:
Sharp declines in equity markets in the fourth quarter of 2018 were almost entirely erased by a strong rally through the first quarter of 2018. Markets shrugged off a host of weak economic data, corporate earnings downgrades and political confusion in the UK. The FOMC’s (Federal Open Market Committee) tone became notably more dovish which drove bond yields back to levels last seen at the beginning of 2018; the ECB’s (European Central Bank) stance also remained accommodative and Chinese policy was eased on both fiscal and monetary fronts. Brexit has continued to dominate the UK political landscape but markets were relatively unmoved by the ongoing uncertainty: sterling strengthened over the period in the belief that the probability of a no-deal Brexit has waned, shrugging off concerns that the chances of a General Election may have increased.
There were few strong sectoral themes over the course of the quarter with returns being driven by corporate newsflow. The Mining sector performed well, as commodity prices strengthened. Domestically exposed sectors, such as General Retail and Food Retail, rose and yet the Small Cap Index, with the highest domestic exposure, underperformed. HSBC led the underperformance of the Banks and the Telecoms sector fell as the revenue outlook continued to deteriorate.
Over the quarter the Company’s NAV rose by 10.3%1, outperforming the FTSE All-Share Index, which rose by 9.4%1.
Phoenix Group reported strong growth in profit with the business beating expectations for both cash flow and capital generation. The life assurance company is delivering on their strategic priorities, having completed the acquisition of the Standard Life Assurance business and their preparations for Brexit. Tesco was the best of the “Big-Four” supermarkets over the Christmas period, reporting strong like-for-like sales in its UK stores. We believe that Tesco is a relative winner in a highly competitive UK food retail market, with a strong management team executing on self-help opportunities. Premier Asset Management has seen share price gains as the company has boosted its assets under management by 6.3% following net inflows into its funds, despite political and economic uncertainty. The business has added three new multi-asset funds to their diversified fund range; an area of the business that has seen continued support.
A lack of exposure to Rio Tinto was the largest relative performance detractor for the quarter. Shares in Rio Tinto rallied as the iron ore price, which drives around 70% of Rio Tinto revenues, strengthened by over 20% as a result of tightening supply. Shares in Hiscox also fell, giving back some of their relative outperformance during the fourth quarter of 2018. Sterling strength has had a negative translational impact on the business which is heavily US focused. Ferguson reported excellent US revenue growth for its first half yearly results, but also flagged that the rate of growth had slowed from 9-10% towards a range for the second half of the year which is likely to be between 4-6%. We view this moderation in its US business as temporary and are reassured that the company continues to win market share across all of its key distribution segments.
During the quarter we purchased new positions in London Stock Exchange, EasyJet and St James’s Place. We have also added to holdings including British American Tobacco, Reckitt Benckiser and Royal Dutch Shell. Through the quarter we have reduced exposure to Unilever, John Laing and Ferguson and have sold our holdings in Inchcape, Mondi and Carnival.
We continue to see a period of sustained growth. Importantly, we expect nominal growth to remain modest as we see structural pressures from demographics, corporate underinvestment and new technology continuing to act as a drag on inflation. The dovish tilt from central banks is clearly supportive for markets, however from time-to-time we expect markets to worry about a shift to a more hawkish stance. With heightened political uncertainty and investor nervousness, 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 spend whilst at the same time we are watching for signs of overheating in the US and monitoring economic growth in China. 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 recent past has demonstrated, it is crucial to be selective and to focus on those companies that are strong operators and that provide a differentiated service or product and that boast a strong balance sheet.
29 April 2019
1Source: BlackRock as at 31 March 2019
ENDS
Latest information is available by typing www.blackrock.co.uk/brig on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.
