Portfolio Update

The information contained in this release was correct as at 31 January 2021. Information on the Company’s up to date net asset values can be found on the London Stock Exchange Website at:

https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.

BLACKROCK INCOME & GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16 )

All information is at 31 January 2021 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	3.2%	8.9%	-9.0%	-5.4%	21.1%	80.3%
Net asset value	-2.4%	14.9%	-8.1%	-1.8%	20.9%	72.4%
FTSE All-Share Total Return	-0.8%	16.1%	-7.5%	-1.6%	31.5%	66.5%
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:	180.58p
Net asset value – cum income*:	185.85p
Share price:	177.00p
Total assets (including income):	£45.0m
Discount to cum-income NAV:	4.8%
Gearing:	7.5%
Net yield**:	4.1%
Ordinary shares in issue***:	22,071,625
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.2%
* Includes net revenue of 5.27 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 4.1% and includes the 2019 final dividend of 4.60p per share declared on 24 December 2019 and paid to shareholders on 19 March 2020 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 Analysis	Total assets (%)
Financial Services	11.5
Support Services	9.3
Pharmaceuticals & Biotechnology	8.0
Mining	7.2
Personal Goods	7.0
Household Goods & Home Construction	7.0
Oil & Gas Producers	6.1
Media	5.1
Banks	5.1
Tobacco	3.9
Life Insurance	3.8
Nonlife Insurance	3.5
Travel & Leisure	3.4
General Retailers	3.3
Health Care Equipment & Services	3.2
Food & Drug Retailers	3.0
Electronic & Electrical Equipment	1.5
Industrial Metals & Mining	1.5
Real Estate Investment & Services	1.5
Technology Hardware & Equipment	1.1
Electricity	1.1
Real Estate Investment Trusts	0.6
Industrial Transportation	0.2
Net Current Assets	2.1
	-----
Total	100.0
	=====

Country Analysis	Percentage
United Kingdom	94.1
United States	2.6
Italy	1.1
Netherlands	0.1
Net Current Assets	2.1
	-----
	100.0
	=====

*Top 10 holdings	Fund %
AstraZeneca	6.7
Rio Tinto	5.2
RELX	5.2
Unilever	4.7
Reckitt Benckiser	4.2
British American Tobacco	3.9
Royal Dutch Shell ‘B’	3.7
Smith & Nephew	3.2
Tesco	3.0
Standard Chartered	2.7

*These percentages reflect portfolio exposure per stock and include more than one holding per stock where relevant.

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

BlackRock Income and Growth Investment Trust plc returned -2.4% during the month, underperforming the FTSE All-Share which returned -0.8%. 

Market Summary:

In January, positive investor sentiment towards equities on the back of activity restart and persistently low interest rates was offset by vaccination deployment struggles in Europe leaving global equities slightly negative during the period.

Democratic victories in both of Georgia’s Senate runoff elections will see a slim majority for the Democrats over all branches of US government; the White House, the House of Representatives and the Senate.

Late in the month, U.S. stocks scaled new highs before selling off briefly as large price swings in a small set of stocks that have been popular targets of short sellers lead to a wave of technical deleveraging.

In the UK, the vaccine deployment program proved to be on a successful track, however, a third lockdown hindered equities. The FTSE All Share fell -0.8% in January with Consumer Goods, Financials and Industrials as top underperforming sectors, while Oil & Gas, Basic Materials, and Technology outperformed.
 

Stocks:

Taylor Wimpey was the top detractor from the Company during the period; the company was impacted by tighter lockdowns leaving construction sites shuttered and pauses to the housing market. Whitbread also fell back during the period and Mastercard underperformed on the likelihood of extended lockdowns that will delay the return of cross border travel.

Next was a top positive contributor during the month; the company posted a strong trading statement indicating the success of their online business offset the closures in retail. Tesco reported stronger sales and performed well; the company was another positive contributor to the Company.

Portfolio Activity:

Over the month, we sold our holding in National Grid, we reduced Lloyds and British American Tobacco and we added to Hays and Hiscox.

Dividends:

From peak to trough, FTSE All Share dividends fell by around 40%. The Company has fared better than this as we have either not owned or been underweight the biggest cuts, and conversely, we have been overweight the more resilient parts of the market. We estimate that our Company has seen a c.30% peak to trough decline in dividends.  We believe that this relative resilience stems from our focus on identifying cash generative franchises with robust balance sheets. 

When assessing the dividend outlook for the FTSE All Share, we estimate that around half of this 40% peak-to-trough fall in dividends will prove permanent and half will be temporary. Turning to the Company, we expect less than 10% of the portfolio’s dividend to be permanently impaired and we are already seeing a number of holdings coming back to the dividend list, in some cases reinstating dividends that had been deferred during the pandemic.

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 future.  A number of companies that we have considered to be overdistributing for a several years have now reset their distributions to more appropriate levels.  This gives us confidence that UK Equities offer an attractive source of yield in an income-starved global context. Additionally, the Company’s income reserve provides further resilience to the Company’s dividend outlook.

Outlook:

2021 has begun much as 2020 ended; dominated by politics, rising Covid-19 cases and growing hope that vaccines will end this crisis. Increased Covid-19 cases and new more-transmissible variants are prompting more stringent and longer restrictions throughout the world. This will lead to delays in activity restarting, implying a new round of downward revisions to near-term growth forecasts.  We are watching the risks tied to the Covid-19 mutation that has seen hospitalisations in the UK surpass their spring 2020 peak.  In contrast, hospitalisations and death rates have come down in other parts of Europe and remain below their spring peak. However, on the more positive front, there are a growing number of effective vaccines available, and assuming that vaccination programs are indeed successful in 1H21, then the impact of additional near-term lockdowns is unlikely to be material, especially given continued government and central bank support.

Given that economic activity is heavily suppressed by the health response to the virus – as opposed to typical business cycle – a delayed restart could mean a faster recovery once the vaccine is distributed, unleashing pent-up consumer and corporate demand. Until then, policy support remains essential with more needed in Europe. US congress has agreed on a $900 billion fiscal package for Covid-19 support, including direct payments to households and an extension to unemployment benefits, which is very supportive.  For one of the few times in the past four decades since partisan alliances became stronger, a single party will control all branches of the US government – White House, House and Senate; this will shape the future of US fiscal response. One of the big issues to watch in 2021 is the extent to which inflationary pressures build and the response from central banks, especially in the US with significant implications for market leadership. 

Turning to the UK specifically, we have, finally, got a Brexit deal that provides increased clarity on the UK’s trading relationship with the EU. 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. 

Finally, we continue to be encouraged by the outlook for UK dividends as a number of companies used this crisis to reset their dividends to more sustainable levels and as regulatory, social and economic pressures ease.  Resilience was a crucial feature of the Company 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.

15 February 2021