BlackRock Income and Growth Investment Trust: The UK post-pandemic revival

BlackRock

The UK is back on its feet after a tough pandemic and protracted Brexit negotiations, says David
Goldman, Co-Manager of the BlackRock Income and Growth Investment Trust plc.

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

Capital at risk. The value of investments and the income from them can fall as well as rise and are
not guaranteed. Investors may not get back the amount originally invested.

UK has been a tough place to invest in recent years, but a skeleton Brexit deal and a successful
vaccine rollout are drawing investors back to the market. For the BlackRock Income and Growth
Investment Trust, the key is to find those companies with long-term, sustainable cash flows and
pricing power, that can invest for the future but still pay dividends to shareholders. It’s a tall order,
but there are plenty of opportunities.

After the profound economic hit from the pandemic, green shoots are emerging. There has been
huge central bank and government support for the economy. Money supply has hit a peace-time
record. These measures have helped keep the economy on its feet in spite of the difficulties of the
pandemic and put it in a good position for recovery.

Equally, the partial resolution of Brexit means companies can begin long-term planning. In the recent
budget, the Chancellor tried to give a longer term framework around corporate taxation. He helped
companies plan for future investments and put incentives in place for those investments. Visibility
for corporates is steadily improving as economies recover and progress is made politically and in the
fight against the pandemic.

UK shake-out

The pandemic also provided a much-needed shake-out of UK companies. The UK has historically
been one of the highest-yielding markets in the developed world, but too many companies were
paying dividends at the expense of investing in their businesses. Companies that were over-
distributing on dividends have been ‘found out’ during this crisis and forced to rethink their payouts.
This means that dividends in the UK market are now far healthier and more sustainable than they
have been for many years.

We can find plenty of businesses for our portfolio that generate sufficient cash to invest in their
businesses but are also sufficiently cash generative that they can pay a growing dividend as well. We
have businesses in the Trust that have grown their dividends for over 50 years. This compounding
effect is a valuable contributor to total return over time.

Valuations still look appealing in the UK market, even after some recent recovery in UK shares. The
UK has been out of favour for some time and remains an attractive market relative to its
international peers and relative to its history. We invest selectively outside the UK as well, allowing
us to introduce themes – such as payment systems or renewable energy – that aren’t represented in
the UK market.

Our portfolio

The economic recovery is building momentum globally. As such, we have been tilting the emphasis
in the Trust towards those shares we expect to benefit from that recovery and from the reopening of
societies. These include companies in the more economically sensitive areas of financials, support
services and consumer discretionary companies.

That said, the risks are finely balanced, so we retain holdings in the healthcare and consumer staples
space, where we find companies with strong free cash flow and dividend growth potential at
attractive valuations. As always, our greatest focus is on the individual companies, finding cash
generative businesses that are rewarding shareholders and reinvesting in the business.
At BlackRock, we have significant analytical resources at our fingertips, and this has proved
particularly important when assessing the environmental, social and governance (ESG) risks for
companies. We believe that companies need to operate within healthy ecosystems if they are to
thrive over the long term. That means developing sustainable relationships with all stakeholders
including suppliers, customers, employees and shareholders. When we talk to companies, we seek
those demonstrating the right behaviours. For us, this is not separate to the investment case, but
integral to it.

We believe this is a fertile time to be investing in the UK. The economy is emerging from a difficult
time, but UK companies should emerge stronger and more resilient.

Risk Warnings

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy. Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may
change from time to time.

Trust Specific Risks

Liquidity risk: The Fund’s investments may have low liquidity which often causes the value of these
investments to be less predictable. In extreme cases, the Fund may not be able to realise the
investment at the latest market price or at a price considered fair.
Gearing risk: Investment strategies, such as borrowing, used by the Trust can result in even larger
losses suffered when the value of the underlying investments fall.

Important Information

Issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the
Financial Conduct Authority. Please refer to the Financial Conduct Authority website for a list of
authorised activities conducted by BlackRock.

The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has
delegated certain investment management and other ancillary services to BlackRock Investment
Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and
dealing may only be through a member of the Exchange. The Company will not invest more than
15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock
Exchange plc and is used under licence.

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders
may realise returns that are lower or higher than NAV performance.

BRIG currently conducts its affairs so that its securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to non-mainstream investment products and intends to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct
Authority’s restrictions which apply to non-mainstream investment products because they are shares in an investment trust. Any research in this material has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally.

BlackRock has not considered the suitability of this investment against your individual needs and risk
tolerance. To ensure you understand whether our product is suitable, please read the fund specific
risks in the Key Investor Document (KID) which gives more information about the risk profile of the
investment. The KID and other documentation are available on the relevant product pages at
www.blackrock.co.uk/its. We recommend you seek independent professional advice prior to
investing.

This material is for information purposes only and does not constitute an offer or invitation to
anyone to invest in any BlackRock funds and has not been prepared in connection with any such
offer.

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

© 2021 BlackRock, Inc. All Rights reserved.

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