BlackRock Income and Growth Investment Trust Plc - Portfolio Update
PR Newswire
London, November 24
The information contained in this release was correct as at 31 October 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 October 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 | -1.0% | -2.1% | 22.2% | 16.8% | 23.3% | 102.3% |
| Net asset value | 0.8% | 1.6% | 30.4% | 16.6% | 26.7% | 95.6% |
| FTSE All-Share Total Return | 1.8% | 3.5% | 35.4% | 17.6% | 31.4% | 94.1% |
| 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: | 198.50p |
| Net asset value - cum income*: | 203.15p |
| Share price: | 191.00p |
| Total assets (including income): | £47.5m |
| Discount to cum-income NAV: | 6.0% |
| Gearing: | 6.0% |
| Net yield**: | 3.8% |
| Ordinary shares in issue***: | 21,398,842 |
| Gearing range (as a % of net assets): | 0-20% |
| Ongoing charges****: | 1.2% |
* Includes net revenue of 4.65 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 3.8% 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 and paid to shareholders on 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 | 15.1 |
| Pharmaceuticals & Biotechnology | 8.9 |
| Household Goods & Home Construction | 7.8 |
| Financial Services | 6.3 |
| Media | 6.3 |
| Oil & Gas Producers | 5.8 |
| Mining | 5.4 |
| Banks | 5.1 |
| Life Insurance | 5.0 |
| Personal Goods | 4.2 |
| Nonlife Insurance | 3.7 |
| Tobacco | 3.5 |
| General Retailers | 3.3 |
| Health Care Equipment & Services | 2.7 |
| Travel & Leisure | 2.7 |
| Electronic & Electrical Equipment | 2.5 |
| Food & Drug Retailers | 2.3 |
| General Industrials | 1.3 |
| Software & Computer Services | 1.3 |
| Electricity | 0.9 |
| Real Estate Investment Trusts | 0.8 |
| Technology Hardware & Equipment | 0.8 |
| Food Producers | 0.8 |
| Industrial Engineering | 0.6 |
| Net Current Assets | 2.9 |
| ----- | |
| Total | 100.0 |
| ===== |
| Country Analysis | Percentage |
| United Kingdom | 89.9 |
| United States | 4.3 |
| France | 2.9 |
| Net Current Assets | 2.9 |
| ----- | |
| 100.0 | |
| ===== | |
| Top 10 holdings | Fund % |
| AstraZeneca | 7.0 |
| RELX | 5.1 |
| Royal Dutch Shell 'B' | 4.6 |
| Reckitt Benckiser | 4.4 |
| Unilever | 3.8 |
| 3i Group | 3.7 |
| Rio Tinto | 3.6 |
| British American Tobacco | 3.5 |
| Electrocomponents | 3.3 |
| Ferguson | 3.3 |
Commenting on the markets, representing the Investment Manager noted:
Performance Overview:
The Company returned 0.8% during the month, underperforming the FTSE All-Share which returned 1.82%.
Global equities rose in October on the back of a strong start to US Q3 earnings; 80% of reporting companies beat consensus despite concerns around supply and cost pressures.
Banks performed relatively well after a broad rise in global bond yields, notably the UK 10-year gilt which hit a two-year high, and by strong results in the US banking sector.
The Energy sector gained as crude touched a seven-year high after OPEC+ stuck with its existing output plans. US employment report was sufficiently mixed to revive the debate over whether the US Federal Reserve will really go ahead with the planned tapering.
There was limited equity market impact from the UK Budget, however, the greater than expected degree of fiscal stimulus delivered by the Chancellor sparked debate about Bank of England plans to withdraw monetary policy support. The proposed alcohol duty changes provided a boost for the pub stocks and travel & leisure sector.
The FTSE All Share rose 1.82% during October with Utilities, Financials and Health Care as top performing sectors while Telecommunications, Technology and Consumer Goods underperformed.
Stocks:
In terms of detractors from performance, THG fell during the month given a slow-down in trading as e-commerce trends lap very strong 2020 COVID comparators. We are encouraged to see the company improve its governance, announcing the search for an executive chairman, removing the golden share and improving disclosure. Two companies which the Company doesn't own, HSBC and GlaxoSmithkline were detractors during the month as good results led to strong share price performance during the month. Rio Tinto was another detractor from the portfolio given continued weakness in the price of iron ore.
Standard Chartered and 3i benefitted from strength in the Financials sector; both were top contributors to the Company during the month. Electrocomponents rose after delivering a strong earnings statement continuing its impressive operational performance through the COVID era; we remain excited about the long-term growth potential here. RELX was again a top contributor on the back of strong results reported previously.
Portfolio Activity:
During the period, we bought a new holding in Pearson as we believe the education company can successfully navigate the transition from print to digital in the long term. Whilst we expect the journey will be volatile, the current strong balance sheet, strong new management team and well invested base gives us confidence that the company can achieve this. We sold Bodycote as we felt the shares were fully valued for the opportunities we can see in the medium term; the company has been a successful long-term holding. We also sold Intermediate Capital which is a holding we purchased during the covid crisis at significantly lower prices; the shares have nearly doubled since and have been sold given a move back towards fair value.
Outlook:
As the world approaches some sort of post-covid normalisation and economies reopen, many opportunities and risks are being presented. We are closely monitoring how earnings react to factors including the retraction of government stimulus, changes in consumer wallets and behaviours. Much like the structural change of digitisation that arose in the throes of Covid, we monitor these aforementioned factors and others for signs of other structural changes.
The growth in economic activity has caused some strains on supply chains with specific industry shortages as well as building inflationary pressures which can squeeze companies' margins. We continue to concentrate the portfolio on those businesses who display pricing power and thus able to protect margins over the medium and 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.
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 and a desire to find unlevered free cash flow.
Amidst market normalisation, we see cash generation improving and dividends payments recovering. Broadly speaking we've been surprised by how quickly dividends have come back with large contributions from the mining sector where the likes of Rio Tinto and BHP have been able to pay large special dividends. While dividends are not far off from pre-Covid levels as the majority of companies are paying dividends once more, we note the large contribution from special dividends that may not persist. We view the outlook for ordinary dividends for the UK market with optimism as most companies have emerged from the Covid crisis with appropriate dividend policies.
We continue to have conviction in cash-generative companies that have delivered for the Company and we foresee delivering into the future. As always, we are focused on stock-specifics and selecting holdings that are best placed to perform well amidst market normalisation. At present, we feel liquidity conditions are relatively supportive and 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.
23 November 2021.
