BlackRock Income and Growth Investment Trust NAV returned 4.8% during the month, outperforming the FTSE All-Share

BlackRock

BlackRock Income and Growth Investment Trust plc (LON:BRIG) has announced its latest portfolio update.

All information is at 30 April 2021 and unaudited.

For more information on the BlackRock Income and Growth Investment Trust and how to access the opportunities presented by the income and growth sector, please visit: www.blackrock.com/uk/brig

Performance at month end with net income reinvested

One
Month
Three
Months
One
Year
Three
Years
Five
Years
Since
1 April
2012
Sterling
Share price7.6%6.7%17.0%5.0%24.9%92.4%
Net asset value4.8%10.6%23.9%7.1%33.6%90.7%
FTSE All-Share Total Return4.3%10.6%25.9%7.7%39.9%84.1%
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:197.46p
Net asset value – cum income*:200.63p
Share price:184.00p
Total assets (including income):£47.9m
Discount to cum-income NAV:8.3%
Gearing:8.4%
Net yield**:3.9%
Ordinary shares in issue***:21,892,990
Gearing range (as a % of net assets):0-20%
Ongoing charges****:1.2%

* Includes net revenue of 3.17 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 3.9% and includes the 2020 final dividend of 4.60p per share declared on 01 February 2021 and paid to shareholders on 12 March 2021 and the 2020 interim dividend of 2.60p per share declared on 24 June 2020 and paid to shareholders on 1 September 2020.

*** 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 AnalysisTotal assets (%)
Financial Services10.9
Support Services10.6
Household Goods & Home Construction8.1
Pharmaceuticals & Biotechnology8.0
Mining7.4
Oil & Gas Producers6.0
Personal Goods5.8
Banks5.0
Life Insurance4.6
Travel & Leisure4.4
Media4.0
General Retailers3.7
Tobacco3.7
Health Care Equipment & Services3.4
Nonlife Insurance2.7
General Industrials2.3
Food & Drug Retailers1.9
Electronic & Electrical Equipment1.6
Industrial Metals & Mining1.4
Electricity1.0
Technology Hardware & Equipment0.9
Industrial Engineering0.8
Real Estate Investment Trusts0.7
Real Estate Investment & Services0.3
Net Current Assets0.8
—–
Total100.0
=====
Country AnalysisPercentage
United Kingdom91.6
United States3.4
France2.9
Italy1.0
Sweden0.3
Net Current Assets0.8
—–
100.0
=====
Top 10 holdingsFund %
AstraZeneca6.1
Rio Tinto5.3
Reckitt Benckiser4.6
Unilever4.1
RELX4.0
British American Tobacco3.7
Royal Dutch Shell ‘B’3.6
Smith & Nephew3.3
Standard Chartered2.9
Ferguson2.7

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The Company returned 4.8% during the month, outperforming the FTSE All-Share which returned 4.3%. 

Market Summary:

Global equity markets rose during April with the support of continued Covid-19 vaccine deployment and reports of strong corporate earnings. While Europe’s vaccine rollout significantly improved, concerning virus news came from India where the country grappled with soaring Covid cases and shortages of medical resources.

The White House announced a $2.25 trillion jobs and infrastructure plan, adding to the unprecedented fiscal support since last year. The Federal Open Market Committee statement reiterated it is not yet time to discuss any tapering of policy support and the Federal Reserve kept its target for key policy rates close to zero.

The 12th of April brought the reopening of outdoor hospitality and non-essential retail in the UK as the number of Covid-19 cases and deaths fell. The Office of National Statistics weekly indicators of the Covid-19 impact on the UK economy suggested the return to normal accelerated in April; versus pre-pandemic levels, overall credit & debit card payments recovered to 98%, road traffic climbed to 103% and the proportion of the workforce on furlough declined to 13%.

The FTSE All Share index rose 4.3% during April with Basic Materials, Health Care and Industrials outperforming while Oil & Gas underperformed.

Stocks:

Smith & Nephew was a top contributor to the Company, the company reported a better than expected start to 2021 with a rise in Q1 revenue, having been severely impacted by COVID previously.  Grafton also continued its strong performance lifting profit guidance once again during the quarter. Intermediate Capital also contributed positively to performance; the company lifted its interim dividend on the back of reporting a rise in first-half profits. Intermediate Capital was one of the new positions the Company purchased during the market dislocation in 2020.

Bodycote was the top detractor from performance in the period; the company continues to be impacted by a slowdown in its aerospace division due to Covid.  Whitbread was another top detractor, after strong performance earlier in the year, the company gave back some gains during the month. Despite strong results and further progress in its turnaround, Reckitt Benckiser underperformed as the market continues to favour more cyclical companies.

Portfolio Activity:

During the period we purchased Hemnet and Axa. We participated in the IPO of Hemnet, which is the leading residential property portal in Sweden, and is well placed to grow through developing its product suite. Axa is a leading composite insurer in Europe. The investment thesis is based on i) an improving backdrop for insurance rates; ii) valuation – Axa trades at a low absolute and relative valuation as demonstrated by the 6% yield; and iii) operational improvement – the company appears to be making good progress on turning around a disappointing historic acquisition.

We also added to Rentokil and Smith & Nephew and reduced Whitbread and SSP.

Outlook:

Despite the continuation of Covid-19 lockdowns globally, economic activity has been less impacted as consumers and corporates have adapted their behaviours since the development of effective vaccines. Looking ahead, the focus is firmly on the cyclical recovery buoyed by ongoing monetary and fiscal support overwhelming concerns around virus variants.

As economic activity rebounds this has caused some strains on supply chains with specific industry shortages as well as building inflationary pressures including significant increases in commodity prices versus 12 months ago. The prospect of higher inflation has driven bond yields higher with central bankers indicating their willingness, for now, to stay on the side-lines. We are also cognisant of the evolution of relationships between China and the West and the potential impact on industries and shares.

Turning to the UK specifically, the recent published Bank of England report showed continued momentum in UK GDP with expected growth the fastest in post-war records as the UK recovers from an extremely weak Covid-impacted 2020.  This is against a backdrop of UK valuations that have been extreme, trading at multi-decade lows versus other international markets, with a recent flurry of M&A deals highlighting the dispersion and value on offer in the FTSE. We continue to believe that this dispersion should narrow given the increased certainty and reduced risk regarding Brexit in addition to the UK’s strong vaccination effort. 

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 several years reset their dividends during the pandemic. Resilience was a crucial feature of the portfolio 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.

20 May 2021

For more information on the BlackRock Income and Growth Investment Trust and how to access the opportunities presented by the income and growth sector, please visit: www.blackrock.com/uk/brig

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