BlackRock Income and Growth Investment Trust Plc - Portfolio Update
PR Newswire
LONDON, United Kingdom, May 24
The information contained in this release was correct as at 30 April 2024. 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 2024 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 | 1.9% | 2.7% | 1.7% | 13.8% | 14.4% | 118.9% |
Net asset value | 1.9% | 5.9% | 4.9% | 20.6% | 27.9% | 130.0% |
FTSE All-Share Total Return | 2.5% | 7.5% | 7.5% | 23.9% | 30.1% | 128.2% |
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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: | 213.77p |
Net asset value - cum income*: | 217.79p |
Share price: | 186.50p |
Total assets (including income): | £47.8m |
Discount to cum-income NAV: | 14.4% |
Gearing: | 5.5% |
Net yield**: | 4.0% |
Ordinary shares in issue***: | 20,115,258 |
Gearing range (as a % of net assets): | 0-20% |
Ongoing charges****: | 1.28% |
* 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 4.0% and includes the 2023 Interim Dividend of 2.60p per share declared on 21 June 2023 with pay date 1 September 2023, and the 2023 final dividend of 4.80p per share declared on 21 December 2023 with pay date 15 March 2024. | |
*** 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 2023. | |
Sector Analysis | Total assets (%) |
Banks | 10.3 |
Support Services | 10.2 |
Pharmaceuticals & Biotechnology | 9.2 |
Oil & Gas Producers | 9.0 |
Financial Services | 8.4 |
Media | 6.7 |
Mining | 6.1 |
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Household Goods & Home Construction | 5.9 |
General Retailers | 4.2 |
Real Estate Investment Trusts | 3.8 |
Nonlife Insurance | 3.3 |
Travel & Leisure | 3.2 |
Personal Goods | 3.1 |
Food Producers | 2.9 |
Industrial Engineering | 2.6 |
Life Insurance | 2.3 |
Tobacco | 1.6 |
Electronic & Electrical Equipment | 1.5 |
Health Care Equipment & Services | 1.3 |
Leisure Goods | 1.0 |
General Industrials | 0.1 |
Net Current Assets | 3.3 |
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Total | 100.0 |
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Country Analysis |
Percentage |
United Kingdom |
92.7 |
United States | 2.6 |
Switzerland | 1.4 |
Net Current Assets | 3.3 |
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| 100.0 |
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Top 10 holdings
| Fund %
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AstraZeneca | 7.7 |
Shell | 7.5 |
RELX | 5.2 |
Rio Tinto | 4.8 |
3i Group | 4.6 |
HSBC Holdings | 4.2 |
Unilever | 3.1 |
Tate & Lyle | 2.9 |
Segro | 2.7 |
Reckitt | 2.7 |
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Commenting on the markets, representing the Investment Manager noted:
Performance Overview:
The Company returned 1.9% during the month net of fees, underperforming the FTSE All-Share which returned 2.5%.
Market Summary:
Global equity markets fell in April, however, UK markets showed resilience as signs of easing inflation, expectations of interest rate cuts, and M&A activity helped improve investor sentiment.
The FTSE 100 rose steadily over the month, before reaching a record high of 8,147 points1, benefitting from the strength in oil, copper, and precious metals prices.
The healthcare and consumer staples sectors, which are significant dollar earners, also contributed to the UK market's strong relative performance, aided by sterling's weakness against the US currency2.The strong performance also trickled down to UK small and mid-cap stocks, although not to the same extent, with the FTSE 250 ending 0.6% higher3.
US equities fell over the month of April as sticky inflation dampened hopes of near-term interest rate cuts from the Federal Reserve. Strong jobs market combined with elevated inflation has led Fed rate cuts to be pushed further out, with a June cut now appearing unlikely.
The European Central Bank, however, was more dovish as Eurozone inflation remained steady at 2.4% in April and economic data points to rate cuts in June4.
The FTSE All Share had rose by 2.5% during April with Basic Materials, Oil & Gas and Health Care as the top performing sectors.
Stock comments:
WH Smith was the top detractor during the period as progress in their US division disappointed though we believe that this is temporary and that there is still significant growth on offer in the region. Phoenix was another top detractor, having performed well post results in March, the shares reacted negatively to a sell-side broker downgrade.Segro fell during the month despite a reassuring trading update that demonstrated continued rental growth.
Rio Tinto rose reflecting the rebound in iron ore prices. NatWest rose following a robust trading update that highlighted the resilience of its Net Interest Income as headwinds from higher deposit costs fade. Tate & Lyle performed strongly during the month, although there was limited company specific newsflow during the month.
Changes:
During the month, we started a new position in Anglo American. We view BHP's bid for Anglo American as the beginning of a process which will result in a materially higher price when the deal is ultimately done. The approach from BHP highlights the importance and value of copper assets, a theme we also have exposure to through Weir, whose products and services support the mining industry.
Outlook:
Equity markets entered 2024 in a buoyant mood following a strong and broad rally in the latter part of 2023. The outlook, and optimism, is a far cry from 12 months ago, when supply chains were hugely disrupted, and inflation was double digit and well ahead of central banks' targets prompting rapid and substantial interest rates hikes despite an uncertain demand environment. Despite this, equities had one of their best years on record outperforming bonds with double digit increases, in dollar terms, across most of the developed world and some emerging markets. In the US, the Nasdaq was the standout rising by 54% driven by the largest seven companies that rebounded strongly (+c.70%) after a poor 2022, when they had fallen by 39% as a group. The FTSE All Share had returned by 7.9% in 2023. China was the surprise negative in 2023, with no noticeable COVID re-opening recovery and lacklustre growth despite government attempts to stimulate.
As we pass the first quarter of 2024, markets have shifted to 'goldilocks' territory whereby slowing inflation has signalled the peak for interest rates while broad macroeconomic indicators that have been weak are not expected to deteriorate further. This is also helpful for the cost and availability of credit which has recently improved having been deteriorating through most of 2023. During December, bond markets had begun to price in 130bps of easing in the US and a not dissimilar amount in the UK and Europe. We believed that this quantum of cuts will prove to be overly aggressive without a significant deterioration in the economy which we don't expect. That said despite these expectations moderating significantly during Q1, stock markets have continued to make progress in the developed world. Labour markets remain resilient for now with low levels of unemployment while real wage growth is supportive of consumer demand albeit presenting a challenge to corporate profit margins.
Notably in 2024, geopolitics will play a more significant role in asset markets. This year will see the biggest election year in history with more than 60 countries representing over half of the world's population, c.4 billion people going to the polls. While most, such as the UK's are unlikely to have globally significant economic or geopolitical ramifications, others, such as the US elections in November, could have a material impact. We believe political certainty may 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 portfolios for any particular election outcome, we are mindful of the potential volatility and the opportunities that may result.
As we have commented several times before, the UK stock market continues to remain 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 with the buyback yield of the UK, at the end of 2023, standing at a respectable c.2.5%. Combining this with a dividend yield of c.4%, the cash return of the UK market is attractive in absolute terms and comfortably higher than other developed markets. Although we anticipate further volatility ahead as earnings estimates moderate, we know that in the course of time risk appetite will return and opportunities are emerging. As we have stated in previous commentaries, we have identified a number of 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 with 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 identifying the companies that strengthen their long-term prospects as well as attractive turnarounds situations.
1 https://www.proactiveinvestors.com/companies/news/1046293/ftse-100-live-blue-chips-close-near-record-high-us-stocks-mixed-1046293.html
2 https://www.fxstreet.com/news/pound-sterling-falls-due-to-us-dollars-recovery-uncertainty-ahead-of-boes-policy-decision-202405080812
3 https://www.reuters.com/markets/europe/anglo-american-boosts-londons-ftse-100-near-record-high-2024-05-03/
4 https://www.reuters.com/markets/rates-bonds/ecb-rate-cut-case-getting-stronger-says-chief-economist-lane-2024-05-06/#:~:text=The%20ECB%20has%20all%20but,jobs%20data%20late%20last%20week.
24 May 2024
