BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC The information contained in this release was correct as at 30 September 2023. 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 September 2023 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 |
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Share price | -0.3% | -0.8% | 5.3% | 12.5% | 11.9% | 108.6% |
Net asset value | 2.0% | 1.3% | 15.4% | 35.1% | 17.8% | 113.8% |
FTSE All-Share Total Return | 1.8% | 1.9% | 13.8% | 39.8% | 19.7% | 108.3% |
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Source: BlackRock |
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BlackRock took over the investment management of the Company with effect from 1 April 2012.
At month end
Sterling:
Net asset value - capital only: | 203.49p |
Net asset value - cum income*: | 207.18p |
Share price: | 182.50p |
Total assets (including income): | £46.8m |
Discount to cum-income NAV: | 11.9% |
Gearing: | 7.8% |
Net yield**: | 4.0% |
Ordinary shares in issue***: | 20,668,259 |
Gearing range (as a % of net assets): | 0-20% |
Ongoing charges****: | 1.18% |
* Includes net revenue of 3.69pence 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 4.0% and includes the 2022 final dividend of 4.70p per share declared on 1 February 2023 with pay date 15 March 2023, and the 2023 Interim Dividend of 2.60p per share declared on 21 June 2023 with pay date 1 September 2023. | |
*** excludes 10,081,532shares 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 2022. | |
Sector Analysis | Total assets (%) |
Support Services | 10.8 |
Oil & Gas Producers | 10.4 |
Pharmaceuticals & Biotechnology | 9.1 |
Mining | 8.1 |
Banks | 7.7 |
Financial Services | 7.6 |
Household Goods & Home Construction | 7.5 |
Media | 6.3 |
General Retailers | 4.6 |
Personal Goods | 4.1 |
Nonlife Insurance | 2.9 |
Electronic & Electrical Equipment | 2.6 |
Life Insurance | 2.5 |
Food Producers | 2.5 |
Real Estate Investment Trusts | 2.5 |
Health Care Equipment & Services | 2.3 |
Tobacco | 1.8 |
Travel & Leisure | 1.7 |
Gas, Water & Multiutilities | 1.5 |
Leisure Goods | 1.1 |
Industrial Engineering | 1.0 |
Net Current Assets | 1.4 |
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Total | 100.0 |
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Country Analysis |
Percentage |
United Kingdom |
93.0 |
United States | 2.4 |
Switzerland | 1.9 |
France | 1.3 |
Net Current Assets | 1.4 |
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| 100.0 |
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Top 10 holdings
| Fund %
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Shell | 8.1 |
AstraZeneca | 7.2 |
Rio Tinto | 5.4 |
RELX | 5.0 |
Reckitt | 4.6 |
3i Group | 4.6 |
Unilever | 3.3 |
BHP | 2.7 |
Rentokil Initial | 2.7 |
Standard Chartered | 2.7 |
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Commenting on the markets, representing the Investment Manager noted:
Performance Overview:
The Company returned 2.0% during the month, performing broadly in-line with the FTSE All-Share which returned 1.8%.
Market Summary:
UK equity markets were positive in September as the price of oil soared while global equity markets experienced their worst month in 2023.
In the US, the Federal Reserve paused its tightening cycle and pressed on with the higher-for-longer narrative for interest rates. Oil prices surged higher driven by OPEC and underpinned concerns of another spike in inflation. Consumer spending started to come under pressure with pandemic savings drying up and tightening lending conditions. In the Eurozone, the European Central Bank (ECB) hiked rates to an all-time high but hinted at peak rates as inflation started to ease and hit a 2-year low in the month.
In the UK, as inflation continued to cool, the Bank of England decided to hold interest rates at 5.25%1, after 14 consecutive rate hikes in 2 years and signalling the peak of rate hikes. The month began with Composite, Manufacturing and Services PMIs falling into contraction territory while Construction PMI continued to expand. Services hit a seven-month low but beat estimates. The unemployment rate grew to 4.3%2, its highest rate in nearly two-years, while UK pay continued to rise at a record rate. Core inflation year-on-year (YoY) slowed to 6.2% from 6.9%, while headline inflation YoY slowed to 6.7% from 6.8%3. The bank rate remained at 5.25% as the pound hit its lowest level in six months against the dollar ($1.2239) on the back of the Bank of England's decision to pause interest rate raises.
The FTSE All Share rose 1.82% during September with Oil & Gas, Basic Materials and Health Care as top performing sectors while Industrials, Utilities and Consumer Goods underperformed.
Contributors to Performance:
RELX was a top positive contributor to performance during the month as the company's share pricecontinued to rise after previous strong results. Rio Tinto and BHP benefited from strength in the broader Basic Materials sector.
Standard Chartered was another top contributor to performance on the back of strong results, beating market expectations as they benefited from higher non-interest income and a higher-than-expected net interest margin. The credit quality remains strong and provisions for losses were lower than predicted.
Smith & Nephew was a top detractor from performance during the month as the market remains sceptical around the company's ability to deliver margins. Big Yellow was impacted by the pressures on real estate names, however, we believe the company is well set to benefit from the recovery when it comes. We also note that Big Yellow offers an attractive and growing yield.
Tate & Lyle was another top detractor; the company was impacted by broad weakness and destocking across ingredients.
Changes:
During the period, we purchased two new holdings; Segro and Spirax-Sarco. Segro, an industrial real estate investment trust; has a high-quality portfolio and in recent years the company has demonstrated the rental growth potential and ability to add value through development. Spirax-Sarco is a high-quality engineering business with strong structural drivers around energy efficiency but where the malaise in the bio-processing industry has impacted near-term prospects and valuations; offering an opportunity to start a position.
Outlook:
Inflation has consistently surprised in its depth and breadth, driven by resilient demand, supply chain constraints, and most importantly by rising wages in more recent data. Central banks across the developed world continue to unwind ten years of excess liquidity by tightening monetary policy desperate to prevent the entrenchment of higher inflation expectations. Meanwhile, March saw the first signs of financial stress with the bankruptcy of Silicon Valley Bank and Signature bank in the US serving to highlight the potential issues of the aggressive retrenchment of liquidity. Whilst the ramifications of this crisis remain unclear, it is likely that credit conditions and the availability of credit will continue to recede. This strengthens our belief that companies with robust balance sheets capable of funding their own growth will outperform. We are mindful of this and feel it is incredibly important to focus on companies with strong, competitive positions, at attractive valuations that can deliver in this environment.
We would expect broader demand weakness into the second half of 2023 although the `scars' of supply chain disruption are likely to support parts of industrial capex demand as companies seek to enhance the resilience of their supply chains. A notable feature of our conversations with a wide range of corporates has been the ease with which they have been able to pass on cost increases and protect or even expand margins during 2022. We believe that as demand weakens and as the transitory inflationary pressures start to fade during 2023 (e.g. commodity prices, supply chain disruption) then pricing conversations will become more challenging despite pressure from wage inflation which may prove more persistent. While this does not bode well for margins in aggregate, we believe that 2023 will see greater differentiation as corporates' pricing power will come under intense scrutiny.
The UK's policy has somewhat diverged from the G7 in fiscal policy terms as the present government attempts to create stability after the severe reaction from the "mini-budget". The challenging divergence in inflation between the UK and other developed markets has seen sterling recover some strength, notably against the dollar as markets infer higher rates for longer. Although the UK stock market retains a majority of internationally weighted revenues, the domestic facing companies have continued to be impacted by this backdrop, notably financials, housebuilders and property companies. The valuation of the UK market continues to be extremely low in absolute terms but particularly versus other developed market indices with many companies, notably the domestic earners trading at COVID or Brexit lows in share price or valuation terms. Although we anticipate further volatility ahead as earnings estimates moderate, we know that in the course of time, risk appetites will return and opportunities are emerging.
In China, the re-opening of the economy post the lockdowns has been slower than expected. There are early signs that the Chinese government is looking to stimulate the economy further which may become more apparent as we enter 2024. We continue to focus the portfolio on cash generative businesses with durable, competitive advantages boasting strong leadership as we believe these companies are best-placed to drive returns over the long-term. We anticipate economic and market volatility will persist throughout the year and we are excited by the opportunities this will likely create by identifying those companies using this cycle to strengthen their long-term prospects as well as attractive turnarounds situations.
1 Source: Financial Times, 21 September 2023https://www.ft.com/content/fe9a5705-f3f4-4a00-b1bd-43adc0384286
2 Source: Office of National Statistics 12 September 2023https://www.ons.gov.uk/employmentandlabourmarket/peoplenotinwork/unemployment
3 Source: Office of National Statistics 20 September 2023https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/august2023
19 October 2023
ENDS
