Portfolio Update

BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC
(LEI:5493003YBY59H9EJLJ16)
All information is at 31 January 2020 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 -2.4% 2.0% 11.4% 16.4% 30.0% 98.2%
Net asset value -2.5% 4.2% 13.9% 19.0% 33.3% 87.6%
FTSE All-Share Total Return -3.2% 2.2% 10.7% 18.4% 35.6% 80.1%
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: 204.16p
Net asset value - cum income*: 209.74p
Share price: 202.00p
Total assets (including income): £51.9m
Discount to cum-income NAV: 3.7%
Gearing: 2.6%
Net yield**: 3.6%
Ordinary shares in issue***: 22,840,600
Gearing range (as a % of net assets) 0-20%
Ongoing charges****: 1.1%

   

* includes net revenue of 5.58 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 3.6% and includes the 2019 final dividend of 4.60p per share declared on 24 December 2019 and due to be paid to shareholders on 19 March 2020, and the 2019 interim dividend of 2.60p per share declared on 25 June 2019 and paid to shareholders on 27 August 2019.
*** excludes 10,093,332 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 2019.

   

Sector Analysis Total assets (%)
Pharmaceuticals & Biotechnology 9.4
Financial Services 8.6
Oil & Gas Producers 8.1
Banks 7.3
Media 7.3
Support Services 6.9
Food Producers 6.7
Household Goods & Home Construction 5.1
Gas, Water & Multiutilities 4.9
Life Insurance 4.5
Tobacco 4.3
Travel & Leisure 4.2
Food & Drug Retailers 3.5
Mining 3.5
Mobile Telecommunications 2.7
Health Care Equipment & Services 2.7
Industrial Engineering 1.3
Electronic & Electrical Equipment 1.2
Nonlife Insurance 1.1
General Retailers 0.6
Construction & Materials 0.6
Beverages 0.2
Net Current Assets 5.3
------
Total 100.0
======
Ten Largest Equity Investments
Company Total assets (%)
Royal Dutch Shell 'B' 5.0
AstraZeneca 5.0
RELX 4.4
GlaxoSmithKline 4.4
British American Tobacco 4.3
National Grid 4.0
Unilever 3.6
Tesco 3.5
BHP 3.5
Associated British Foods 3.2

   

Commenting on the markets, Adam Avigdori and David Goldman representing the Investment Manager noted:
 
After a stellar 2019, risk markets began the new decade positively, before volatility picked up towards the end of the month, erasing all the gains from the first half. At the start of the month, the signing of a ‘Phase 1’ US-China trade deal signaled progress in de-escalating global trade disputes, albeit that significant tariffs are still in place and there remain serious challenges to be tackled in the next phase. Gulf tensions rose briefly mid-month when President Trump ordered a US airstrike that killed Major General Qasem Soleimani, leader of the foreign wing of Iran’s Islamic Revolution Guard Corps. Global equity markets and oil prices fell sharply at the end of the month as the fast-spreading coronavirus prompted concerns that the disease would negatively impact the global economy. The UK officially exited the EU on 31st January 2020. The UK and EU now need to negotiate a free trade agreement over the next 11 months of transition; talk around the risk of a hard Brexit is likely to persist to some degree. UK economic data improved sufficiently for the Bank of England to keep interest rates on hold. The FTSE All-Share fell -3.25% in the month, led by the energy and resources sectors, as well as consumer services.
Over the month, the Company returned -2.50%, outperforming the benchmark, the FTSE All-Share which returned -3.25%.
National Grid was the largest contributor to performance. Shares of the utility stock continued to rally on improved sentiment towards UK utilities, following the December General Election. RELX also contributed to performance. The company announced the acquisition of ID Analytics, adding more datasets to the Fraud and Identity solutions within the company’s Risk division, its fastest growing division, enabling RELX to deliver more fraud detection products to the same customers
Standard Chartered detracted from performance. Companies with emerging market exposure saw weakness on fears around the coronavirus. Whitbread also detracted from performance. The company announced a cost-driven downgrade for the year ahead, while business confidence remains subdued despite government pledges to boost regional spending.
In January we purchased Rightmove. We sold positions in Prudential, Moneysupermarket.com and Barclays. We added to positions in Vodafone and 3i Group, and reduced positions in St James’ Place and Hiscox.
2019 proved to be a strong year for equity investors, with the FTSE All-Share returning 19%. The 2020 macro environment marks a big shift from the dynamics of 2019, when an unusual late-cycle dovish pivot by central banks helped offset the negative effect of rising trade tensions. It is unlikely that the same level of accommodative monetary policy will be available, either conventionally or unconventionally, in developed markets in 2020. From a valuation perspective, we recognise that for the most part, valuations are higher but not excessive, with trailing p/e of 19x, up from 15x a year ago. On a free cash flow basis, equity markets still look attractive, with the UK the stand-out at 6.3% and around a 30% discount to the MSCI World across a range of valuations.
For the UK economy, and the equity market, the picture looks better than it has done for a number of years. For the domestic-facing economy, the Conservative majority has brought more political certainty and indeed, although it is early days, we have seen signs of sentiment and investment returning following the election result. We expect this to continue. We believe the UK’s economic climate has the potential to improve, supported by an expected increase in public sector spending. Entering 2020, the UK will be one of the few, if not the only, large developed economy adopting fiscal stimulus. With the backdrop of ‘full’ employment, the recently announced increase to the national living wage suggests disposable income will continue to improve with underlying growth in nominal and real wages for the first time in recent years.
For those who have been following our strategy, we continue to employ a bottom-up approach rather than focusing on a specific macro outcome. We believe in identifying franchises across the UK market which can sustain their competitive advantages over the long term, supporting strong and consistent cash generation. Hence, we will continue to focus the portfolio on stock specific risk where our resources and long-term analysis is best able to deliver capital and income growth over the long-term for shareholders.
We are also conscious that Environmental, Social and Governance matters (“ESG”) is increasingly at the forefront of shareholders’ minds. We have always looked to our companies to operate within a healthy ecosystem of all their stakeholders whether these are shareholders, employees, customers, regulators or suppliers. It is our belief that a company’s ‘ecosystem’ is crucial to ensuring the sustainability of long-term returns.
18 February 2020
Investor Meets Company
UK 100

Latest directors dealings