BlackRock Income and Growth Investment Trust Plc - Portfolio Update
PR Newswire
London, September 17
| BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) |
| All information is at 31 August 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 | -2.5% | 4.5% | -1.4% | 15.4% | 34.1% | 90.4% |
| Net asset value | -3.1% | 1.8% | -1.8% | 15.6% | 34.8% | 78.4% |
| FTSE All-Share Total Return | -3.6% | 2.0% | 0.4% | 20.2% | 31.2% | 73.5% |
| 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: | 195.58p |
| Net asset value - cum income*: | 199.51p |
| Share price: | 194.00p |
| Total assets (including income): | £49.9m |
| Discount to cum-income NAV: | 2.8% |
| Gearing: | 3.1% |
| Net yield**: | 3.6% |
| Ordinary shares in issue***: | 23,017,476 |
| Gearing range (as a % of net assets) | 0-20% |
| Ongoing charges****: | 1.1% |
| * includes net revenue of 3.94 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 3.6% 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 2019 interim dividend of 2.60p per share declared on 25 June 2019 and paid to shareholders on 27 August 2019. |
| *** excludes 9,916,456 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 2018. |
| Sector Analysis | Total assets (%) |
| Oil & Gas Producers | 9.7 |
| Pharmaceuticals & Biotechnology | 9.5 |
| Media | 7.9 |
| Support Services | 7.0 |
| Financial Services | 7.0 |
| Life Insurance | 6.4 |
| Banks | 5.7 |
| Food Producers | 5.4 |
| Household Goods & Home Construction | 5.3 |
| Tobacco | 4.4 |
| Travel & Leisure | 3.9 |
| Food & Drug Retailers | 3.4 |
| Mining | 3.3 |
| Health Care Equipment & Services | 3.0 |
| Gas, Water & Multiutilities | 2.9 |
| Industrial Engineering | 2.7 |
| Mobile Telecommunications | 2.1 |
| Nonlife Insurance | 1.9 |
| Electronic & Electrical Equipment | 1.2 |
| Construction & Materials | 0.9 |
| Chemicals | 0.6 |
| General Retailers | 0.6 |
| Beverages | 0.1 |
| Net Current Assets | 5.1 |
| ------ | |
| Total | 100.0 |
| ====== | |
| Ten Largest Equity Investments | |
| Company | Total assets (%) |
| Royal Dutch Shell 'B' | 6.2 |
| AstraZeneca | 5.1 |
| RELX | 4.4 |
| GlaxoSmithKline | 4.4 |
| British American Tobacco | 3.6 |
| BP Group | 3.5 |
| Tesco | 3.4 |
| BHP | 3.3 |
| Unilever | 3.0 |
| Smith & Nephew | 3.0 |
| Commenting on the markets, Adam Avigdori and David Goldman representing the Investment Manager noted: |
| Global equities sold off in August with the FTSE All Share index falling by -3.6% retracing some of the year to date gains. All regions ended the month producing negative returns with U.S. stocks detracting the most, coming off the all-time highs reached in July. The more challenging market environment was mainly driven by geopolitical frictions, ongoing trade tensions and resultant recession fears. The escalating U.S.-China trade tensions have injected uncertainty into the market, clouding business planning and threatening the longstanding institutional underpinnings of the global economy. Market volatility was prevalent with the S&P 500 posting 11 moves of more than 1% in 22 trading days and the CBOE Volatility Index (VIX) trading as high as 24.8. Investors turned to safe-haven assets like gold as global government yields plunged to historical lows, and the U.S. Treasury curve inverted. Elsewhere in Europe, Italy's political crisis abated amid an agreement to form a coalition government. Finally in the UK, investors remained alert as Prime Minister Boris Johnson announced plans to suspend parliament ahead of the Queen's speech on 14 October, adding to the ongoing domestic political turbulence. |
| Over the quarter the BlackRock Income and Growth Investment Trust fell by -3.1%, partly protecting the fund from broader market losses such as from the FTSE All-Share which fell by -3.6%. |
| The largest detractor to the fund was Prudential whose shares were weak, not only due to further potential rate cuts from the Fed against the ongoing US-China trade tensions, but also the social unrest in Hong Kong. Its shares saw a sharp sell-off at the start of the month, prior to reporting H1 2019 results. The results themselves highlight that they are embarking on a strategy of organic and inorganic diversification for their US business into Fixed Annuities, noting the poorer conditions in the Variable Annuities market as distribution shifts from broker to advised. Elsewhere in the group, Asia continues to deliver with no change in its structural growth story, despite the aforementioned concerns. Shares in John Laing detracted following a weak H1 2019 update, with sizeable write-downs on their wind assets in Australia and Germany citing issues of transmission/regulatory and lack of wind respectively. These write-downs were more than offset by value enhancements and project completions elsewhere such that NAV still increased. Taylor Wimpey saw weakness in its shares despite its trading statement at the end of July which held its full year guidance with end markets being broadly supportive, suggesting no change in customer confidence. |
| Once again, the largest contributor was London Stock Exchange, one of the fund's core holdings, whose shares rose further this month as the market further appreciated synergies and growth potential of the Refinitiv deal. Medtech player, Smith & Nephew, also contributed as its shares rose further after a strong trading statement released at the end of July where they upgraded revenue guidance further. The share price continued to rally through August as the investment community further appraised what this entails for the company. Shares in Pest control specialist, Rentokil, also contributed this month, after the positive set of trading results late in July, we met with the company's management team and would note that the pest control division continues to be the key drivers with strong structural drivers in what is a fragmented industry. |
| During the month we added to positions in Smith & Nephew, St James's Place and Fuller Smith and Turner. We have reduced exposure to Ferguson, Prudential, Lloyds and Rentokil. We have also initiated a position in Grafton. |
| 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, that provide a differentiated service or product and that boast a strong balance sheet. |
| 18 September 2019 |
| Latest information is available by typing 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. |
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