BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
All information is at 31 August 2014 and unaudited.
Performance at month end with net income reinvested.
One Three One Since Three Five
month months year 1 April years years
2012
Sterling:
Share price 2.9% 2.7% 14.5% 41.9% 52.5% 78.5%
Net asset value 3.0% 2.9% 15.6% 32.4% 44.7% 75.0%
FTSE All-Share Total Return 2.2% 0.5% 10.3% 32.3% 44.5% 71.4%
Sources: BlackRock and Datastream
BlackRock took over the investment management of the Company with effect
from 1 April 2012.
At month end
Sterling:
Net asset value - capital only: 171.35p
Net asset value - cum income*: 174.74p
Share price: 171.25p
Total assets (including income): £48.5m
Discount to cum-income NAV: 2.0%
Net Gearing: nil
Net yield**: 3.3%
Ordinary shares in issue***: 26,479,268
Gearing range (as a % of net assets) 0-20%
Ongoing charges****: 1.1%
* includes net revenue of 3.39 pence per share.
** based on an interim dividend of 2.20p per share for the financial year
ending 31 October 2014 and a final dividend of 3.50p per share in respect of
the year ended 31 October 2013.
*** excludes 6,454,664 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
2013.
Benchmark
Sector Analysis Total assets (%)
Pharmaceuticals & Biotechnology 10.5
Oil & Gas Producers 10.2
Support Services 10.1
Life Insurance 10.1
Tobacco 9.4
Banks 6.2
Household Goods & Home Construction 5.5
Food Producers 5.2
Travel & Leisure 4.9
Media 4.2
Non-Life Insurance 3.8
General Retailers 3.6
Mining 3.5
Financial Services 3.2
Mobile Telecommunications 1.9
Electronic & Electrical Equipment 1.7
Net Current Assets 6.0
-----
Total 100.0
-----
Ten Largest Equity Investments
Company % of Total assets
Royal Dutch Shell B 7.1
HSBC 6.2
British American Tobacco 6.2
GlaxoSmithKline 5.3
AstraZeneca 5.2
Reed Elsevier 4.2
Reckitt Benckiser 4.2
Wolseley 4.0
Unilever 3.8
Rio Tinto 3.5
Commenting on the markets, Adam Avigdori and Mark Wharrier, representing the
Investment Manager noted:
Markets
UK equities rose by 2.2% over the month helped by a recovery in mid-cap shares.
Geopolitics continued to feature in the news during the month, with the
situations in both Ukraine and Iraq dominating headlines. At the annual Jackson
Hole economic symposium a speech by ECB president Mario Draghi resulted in a
new expectation of QE for Europe in an attempt to combat low inflation, whilst
US Fed Chair Janet Yellen's speech suggested the Fed was looking at a broad
range of measures to judge when the time is right to increase rates in the US.
In the UK the forward guidance goal posts were shifted again, resulting in
expectations of an interest rate rise deferring into next year.
Portfolio Performance
The Company returned 3.0%* in August, outperforming the FTSE All-Share Index
return of 2.2%. This brings the year to date return to 6.0%, which is ahead of
the FTSE All Share Index return of 3.5%.
Within the portfolio, Essentra rose following the release of its half year
results on 31 July. Strong demand for its innovative cigarette filters and
growing e-cigarette business boosted revenues. The interim dividend was also
increased by 19% compared to last year. Rentokil Initial also reported a rise
in half year profits and its interim dividend increased by 10% compared to last
year. Direct Line contributed positively after the group announced it was
looking to sell its international business and would return the proceeds to
shareholders. A number of the other portfolio holdings that had previously been
impacted by April's rotation away from mid-sized companies benefited from
reporting positive trading results.
Detractors during the month were relatively modest and included Friends Life,
where there is some market uncertainty over its disposal strategy. The company
is due to start a £200m share buyback, whilst the shares yield close to 7%. We
would expect these attributes to provide support for the shares. Despite a
positive move in strategy from Rio Tinto to prioritise cash returns to
shareholders, a fall in the price of iron ore over concerns around oversupply
and weak Chinese demand, caused Rio Tinto shares to fall.
Activity during the period included new purchases of Domino Printing Sciences
and Carnival whilst we added to Imperial Tobacco, Prudential and HSBC. We
reduced Admiral, Dixons Carphone and Berkeley Group and sold Shire.
Outlook
While the economic environment is certainly more benign than it was a year ago,
sterling strength, interest rate uncertainty and the lack of pricing power of
companies mean that the outlook for equities is more nuanced. We continue to
focus more on the specific drivers of individual companies and the ability to
determine their future rather than backing a dominant macro view. Given the
outlook for both economic growth and interest rates remains uncertain, we seek
those companies that can drive returns through self-help and have a clear
strategy to deploy the cashflow they generate.
The portfolio is primarily invested in high free cash flow companies that can
sustain cash generation and pay a growing dividend yield. It also has exposure
to companies with sustainable growth franchises and turnaround situations.
* NAV - Inc. performance.
17 September 2014
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