BlackRock Income and Growth Investment Trust Plc - Portfolio Update
PR Newswire
London, August 20
The information contained in this release was correct as at 31 July 2021. 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 July 2021 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 | 6.2% | 7.4% | 32.5% | 6.5% | 28.7% | 106.6% |
| Net asset value | -0.1% | 0.9% | 23.8% | 4.0% | 28.2% | 92.4% |
| FTSE All-Share Total Return | 0.5% | 1.8% | 26.6% | 5.5% | 32.3% | 87.4% |
| 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: | 198.29p |
| Net asset value - cum income*: | 199.87p |
| Share price: | 195.00p |
| Total assets (including income): | £43.5m |
| Discount to cum-income NAV: | 2.4% |
| Gearing: | 5.8% |
| Net yield**: | 3.7% |
| Ordinary shares in issue***: | 21,742,207 |
| Gearing range (as a % of net assets): | 0-20% |
| Ongoing charges****: | 1.2% |
* Includes net revenue of 1.58 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 3.7% and includes the 2020 final dividend of 4.60p per share declared on 01 February 2021 and paid to shareholders on 17 March 2021 and the 2021 interim dividend of 2.60p per share declared on 23 June 2021 with a pay date of 1 September 2021. | |
| *** excludes 10,081,532 shares held in treasury | |
| **** Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs for the year ended 31 October 2020. | |
| Sector Analysis | Total assets (%) |
| Support Services | 12.3 |
| Financial Services | 8.7 |
| Pharmaceuticals & Biotechnology | 8.3 |
| Household Goods & Home Construction | 7.9 |
| Mining | 6.8 |
| Oil & Gas Producers | 5.5 |
| Personal Goods | 5.3 |
| Media | 4.7 |
| Banks | 4.6 |
| Life Insurance | 4.5 |
| Tobacco | 3.7 |
| Travel & Leisure | 3.5 |
| Nonlife Insurance | 3.4 |
| General Retailers | 3.3 |
| Health Care Equipment & Services | 2.8 |
| Food & Drug Retailers | 2.0 |
| General Industrials | 1.9 |
| Electricity | 1.4 |
| Electronic & Electrical Equipment | 1.4 |
| Industrial Metals & Mining | 1.3 |
| Food Producers | 1.1 |
| Real Estate Investment Trusts | 1.0 |
| Technology Hardware & Equipment | 0.7 |
| Industrial Engineering | 0.7 |
| Real Estate Investment & Services | 0.1 |
| Net Current Assets | 3.1 |
| ----- | |
| Total | 100.0 |
| ===== |
| Country Analysis | Percentage |
| United Kingdom | 90.0 |
| United States | 3.5 |
| France | 1.9 |
| Italy | 1.3 |
| Sweden | 0.2 |
| Net Current Assets | 3.1 |
| ----- | |
| 100.0 | |
| ===== |
| Top 10 holdings | Fund % |
| AstraZeneca | 6.4 |
| RELX | 4.7 |
| Rio Tinto | 4.6 |
| Reckitt Benckiser | 4.1 |
| Unilever | 4.1 |
| Royal Dutch Shell 'B' | 3.8 |
| British American Tobacco | 3.7 |
| Ferguson | 3.1 |
| 3i | 2.8 |
| Smith & Nephew | 2.8 |
Commenting on the markets, the Investment Manager noted:
Performance Overview:
The Company returned -0.1% during the month, underperforming the FTSE All-Share Index which returned 0.5%.
Market Summary:
In July, global equity markets were modestly up, however, volatility was high throughout the month due to the increasing number of COVID-19 Delta variant cases and rapid swings of sentiment regarding inflation expectations. Both EU and US equities reached record highs in the first part of the month followed by a significant sell-off and a partial rebound in the second half of July.
10-year U.S. Treasury yields retracted to 1.18%1 (the lowest in 5 months) around mid-July and pulled back up slightly after. According to the U.S. Department of Labor, inflation surged at its fastest pace in nearly 13 years, as the Consumer Price Index (CPI) increased 5.4%2 from a year earlier. Oil prices decreased in July as a result of the Organization of the Petroleum Exporting Countries (OPEC), the oil cartel, agreeing to boost supply driving the valuation of the Energy sector lower.
The UK was hit with disruptions by the "pingdemic" where the NHS Test and Trace application closed down parts of the UK economy despite the government's attempts to lift remaining lockdown restrictions on "Freedom Day". The UK vaccination rollout continued to prove strength with over 70% of the population fully inoculated3. England's participation in the Euro Cup Finals provided a boost to retail sales and the travel and leisure sector also saw a boost later in the month with the announcement of restrictions on inbound arrivals to the UK being eased.
The FTSE All Share Index rose 0.5% with Basic Materials, Technology and Industrials as top performing sectors while Telecommunication, Oil & Gas, and Health Care were top underperformers.
Stocks:
Rentokil was a top positive contributor during the month; the company delivered a strong set of results with revenues accelerating as workplaces reopened and mobility increased. RELX was another top contributor; the company also reported a guidance upgrade, despite continued weakness in its exhibitions business with revenue and profit growth guided to be above historical levels. Another company with a strong statement was 3i as the valuation of their largest position Action, the discount retailer, grew strongly during the first half.
Reckitt Benckiser was the top detractor from the portfolio on the back of the release of a disappointing earnings statement; margin guidance was lowered primarily as a function of higher input costs and dilution from M&A. Smith & Nephew also detracted from the portfolio despite releasing a strong earnings statement where revenues grew by almost 50% since the last quarter.
Portfolio Activity:
During the period, we did not purchase nor sell any holdings. We reduced Smiths Group and Rio Tinto. We also added to Tate & Lyle.
Outlook:
After five years under a Brexit-induced cloud, the relative position of the UK in the eyes of global investors appears to have improved, helped by the vaccination programme, and evidenced by the resurgence in takeover activity as bidders look to capitalise on the discount at which UK equities trade relative to global peers. Specifically, we've seen acquisitions of real assets potentially demonstrating a desire to find unlevered free cash flow.
The pandemic has generated an economic cycle unlike any other with unprecedented fiscal and monetary responses. Despite the continuation of COVID-19 restrictions globally, economic activity has been less impacted as consumers and corporates in Developed Markets have adapted their behaviours since the development of an effective vaccine. Concerns have been raised around new variants; however, recovery has been buoyed by ongoing monumental monetary and fiscal support.
We have seen during this results season, that the growth in economic activity has caused some strains on supply chains with specific industry shortages as well as building inflationary pressures. Whilst there may be a lag time in companies pricing this inflation leading to short term earnings weakness, we continue to concentrate on owning those businesses who display pricing power in the long term. We continue to monitor the bond market to determine if the current surge in inflation is transitory or, fuelled by a more relaxed Fed, a phenomenon that may persist. We are also cognisant of the evolution of relationships between China and the West and the potential impact on industries and shares.
We continue to have conviction in cash-generative companies that have delivered for the portfolio and we foresee delivering into the future. We view the dividend outlook for the UK market with renewed optimism as we expect dividends, in aggregate, to be more resilient and to grow faster in the future as those companies that had been overdistributing for a number of years reset their dividends during the pandemic. Resilience was a crucial feature of the Company and its underlying holdings in 2020 and while this will still be important in 2021, we are excited by the approaching economic recovery and the opportunity to deliver strong capital and dividend growth for our clients over the long-term.
1 Source: MarketWatch, July 2021https://www.marketwatch.com/story/10-year-treasury-yield-slides-to-5-month-low-below-1-23-11626695866
2 Source: CNBS, July 2021https://www.cnbc.com/2021/07/13/consumer-price-index-increases-5point4percent-in-june-vs-5percent-estimate.html
3Source: BBC, August 2021https://www.bbc.com/news/health-55274833
20 August 2021
