# BlackRock Income and Growth Investment Trust achieving Growth and Resilience

- Link: https://www.directorstalkinterviews.com/blackrock-income-and-growth-investment-trust-achieving-growth-and-resilience/4121119745
- Published: 2023-05-22T08:31:14+01:00
- Author: Amilia Stone

**BlackRock Income and Growth Investment Trust plc** ([LON:BRIG](https://www.directorstalkinterviews.com/company/blackrock-income-and-growth-investment-trust-plc/brig.l))
has announced its latest portfolio update.

All information is at **30 April 2023** and unaudited.

**For more information on the BlackRock Income and Growth Investment Trust**,** 
please visit: [www.blackrock.com/uk/brig](https://www.blackrock.com/uk/individual/products/investment-trusts/our-range/blackrock-income-and-growth-investment-trust/trust-information?siteEntryPassthrough=true&cid=aff:investmenttrusts2020:brig:directorstalk:link)**

**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% | 0.6% | 6.1% | 30.9% | 17.5% | 115.3% | 
| Net asset value | 4.1% | 2.8% | 7.3% | 42.5% | 23.2% | 119.3% | 
| FTSE All-Share Total Return | 3.4% | 1.9% | 6.0% | 45.2% | 24.2% | 112.3% | 
|  |  |  |  |  |  |  | 
| 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: | 211.78p | 
| Net asset value – cum income*: | 215.23p | 
| Share price: | 191.00p | 
| Total assets (including income): | £49.1m | 
| Discount to cum-income NAV: | 11.3% | 
| Gearing: | 5.3% | 
| Net yield**: | 3.8% | 
| Ordinary shares in issue***: | 20,949,796 | 
| Gearing range (as a % of net assets): | 0-20% | 
| Ongoing charges****: | 1.2% |

^(*) Includes net revenue of 3.45 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 2022 interim
dividend of 2.60p per share declared on 22 June 2022 with pay date 1 September 2022
and the 2022 final dividend of 4.70p per share declared on 1 February 2023 with 
pay date 15 March 2023.

*** 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 2022.

| **Sector Analysis** | **Total assets (%)** | 
| Support Services | 11.1 | 
| Pharmaceuticals & Biotechnology | 10.3 | 
| Oil & Gas Producers | 9.1 | 
| Media | 7.8 | 
| Household Goods & Home Construction | 7.2 | 
| Banks | 6.9 | 
| Financial Services | 6.4 | 
| Mining | 5.7 | 
| Personal Goods | 4.3 | 
| General Retailers | 4.1 | 
| Nonlife Insurance | 3.7 | 
| Health Care Equipment & Services | 3.1 | 
| Life Insurance | 2.9 | 
| Electronic & Electrical Equipment | 2.9 | 
| Food Producers | 2.7 | 
| Tobacco | 2.0 | 
| Travel & Leisure | 1.5 | 
| Gas, Water & Multiutilities | 1.5 | 
| Fixed Line Telecommunications | 1.4 | 
| Real Estate Investment Trusts | 1.2 | 
| Leisure Goods | 0.9 | 
| Net Current Assets | 3.3 | 
|  | —– | 
| Total | 100.0 | 
|  | ===== | 
| 
**Country Analysis** | **Percentage** | 
| United Kingdom | 90.3 | 
| Switzerland | 2.6 | 
| United States | 2.1 | 
| France | 1.7 | 
| Net Current Assets | 3.3 | 
|  | —– | 
|  | 100.0 | 
|  | ===== | 
| **Top 10 holdings** | **Fund %** | 
| AstraZeneca | 7.3 | 
| Shell | 7.3 | 
| RELX | 5.1 | 
| Reckitt Benckiser | 4.8 | 
| 3i Group | 3.9 | 
| Rio Tinto | 3.7 | 
| Smith & Nephew | 3.1 | 
| Unilever | 3.1 | 
| Phoenix Group | 2.9 | 
| Pearson | 2.7 |

**Commenting on the markets, representing the Investment Manager noted:**

**Performance Overview:**

The Company returned 4.1% during the month, performing broadly in-line with the 
FTSE All-Share which returned 3.4%.

The FTSE All Share Index rose 3.4% during the month with Telecommunications, Oil&
Gas, and Health Care as top performing sectors while Basic Materials underperformed.

In the US, after a strong January, data showed that momentum in consumer spending
dropped through Q1 and was flat in March. The core Personal Consumption Expenditure(
PCE) index was higher than expected at 4.6%^(1) in March, highlighting the difficult
growth-inflation trade-off the Federal Reserve continues to face.

April data showed positive upside surprise from the services Purchasing Managers
Index (PMI) reading for the Eurozone, while the opposite occurred for manufacturing
PMIs, which surprised to the downside for the region. Overall, the economy seemed
to rebound from a feeble winter, but manufacturing weakness remained a concern and
dampened the upturn.

In the UK, inflation data for March came in higher than expected as rising food 
prices kept year-on-year headline inflation in double digits at 10.1%^(2). Persistent
services inflation kept core inflation at 6.2%. Wage growth also accelerated, despite
an increase in labour supply.

In China, the restart from Covid lockdowns and additional policy support drove Q1
GDP growth to 4.5%^(3) year on year, up from 2.9% in Q4 2022, and above market expectations
of 4.0%. Strong consumer spending played a key role in China’s restart, in contrast
to the softer U.S. retail sales data.

**Stocks:**

Overall, the most recent earnings season has been a positive one for the underlying
holdings of the Company, particularly, for some of the larger positions in the portfolio.**
Smith & Nephew** beat earnings expectations for the first quarter as elective procedure
volumes improved; the company’s sports medicine segment remains a standout with 
growth of 10%. **Phoenix Group’s** results were stronger than expected with solvency,
cash generation and new business all ahead of target. **Rentokil** also delivered
good organic growth in the first quarter with the Hygiene and French Workwear segments
continuing to impress.

Equipment rental business, **Ashtead** was a top detractor during the month. The
company’s share price was impacted by read-across from a peer reporting weaker first
quarter results. **Rio Tinto** and **BHP** were impacted by broader weakness in 
the basic materials sector.

**Changes:**

During the period, we added to holdings in **Admiral** and **Watches of Switzerland**
and reduced **AstraZeneca** and **Smith & Nephew** given strength in the share prices.

**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.

The political and economic impact of the war in Ukraine has been significant in 
uniting Europe and its allies, whilst exacerbating the demand/supply imbalance in
the oil and soft commodity markets. We are conscious of the impact this has on the
cost of energy, and we continue to expect divergent regional monetary approaches
with the US being somewhat more insulated from the impact of the conflict, than 
for example, Europe. Complicating this further, is the continued impact COVID is
having on certain parts of the world, notably China, which has used lockdowns to
control the spread of the virus impacting economic activity. We also see the potential
for longer-term inflationary pressure from decarbonisation and deglobalisation, 
the latter as geopolitical tensions rise more broadly across the world.

We would expect broader demand weakness, 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, as evidenced by
US corporate margins reaching 70-year highs. We believe that as demand weakens and
as the transitory inflationary pressures start to fade during 2023 (e.g. commodity
prices, supply chain disruption), 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 corporate 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 early signs of stability are welcome as financial market liquidity
has increased and the outlook, whilst challenged, has improved. 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 remains highly
supportive as currency weakness supports international earnings, whilst domestic
earners are in many cases 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.

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)Financial Times – Rise in US labour costs and inflation strengthen case for 
Fed rate rise

^(2)Financial Times – Double-digit UK inflation offers little hope for end to cost
of living crisis

^(3)Financial Times – China’s economy rebounds more than expected after Covid reopening

**For more information on the BlackRock Income and Growth Investment Trust**,** 
please visit: [www.blackrock.com/uk/brig](https://www.blackrock.com/uk/individual/products/investment-trusts/our-range/blackrock-income-and-growth-investment-trust/trust-information?siteEntryPassthrough=true&cid=aff:investmenttrusts2020:brig:directorstalk:link)**

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