Portfolio Update

The information contained in this release was correct as at 31 May 2022. 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 May 2022 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	-4.3%	0.6%	-0.1%	6.7%	4.7%	94.2%
Net asset value	0.2%	2.0%	6.3%	16.8%	16.4%	104.8%
FTSE All-Share Total Return	0.7%	2.3%	8.3%	18.4%	22.2%	101.5%
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:	204.16p
Net asset value – cum income*:	208.08p
Share price:	179.00p
Total assets (including income):	£48.1m
Discount to cum-income NAV:	14.0%
Gearing:	2.1%
Net yield**:	4.0%
Ordinary shares in issue***:	21,175,164
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.2%
* Includes net revenue of 3.92 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 4.0% and includes the 2021 interim dividend of 2.60p per share declared on 23 June 2021 and paid to shareholders on 1 September 2021 and the 2021 final dividend of 4.60p per share declared on 13 January 2022 and paid to shareholders on 17 March 2022.
*** 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 2021.

Sector Analysis	Total assets (%)
Support Services	12.2
Pharmaceuticals & Biotechnology	9.7
Oil & Gas Producers	8.3
Household Goods & Home Construction	7.6
Media	6.8
Life Insurance	6.1
Mining	6.0
Financial Services	5.1
Banks	4.6
Nonlife Insurance	4.0
Tobacco	3.6
Health Care Equipment & Services	2.8
Electronic & Electrical Equipment	2.4
Travel & Leisure	2.3
Food Producers	2.1
Personal Goods	2.1
General Retailers	2.0
Fixed Line Telecommunications	1.4
Gas, Water & Multiutilities	1.2
Software & Computer Services	0.9
Industrial Engineering	0.9
Electricity	0.9
Real Estate Investment Trusts	0.6
Net Current Assets	6.4
	-----
Total	100.0
	=====

Country Analysis	Percentage
United Kingdom	85.7
United States	4.2
France	3.5
Australia	0.2
Net Current Assets	6.4
	-----
	100.0
	=====
Top 10 holdings	Fund %
AstraZeneca	7.5
Shell	7.3
RELX	4.7
Rio Tinto	4.7
Reckitt Benckiser	4.3
British American Tobacco	3.6
Phoenix Group	3.6
Standard Chartered	3.0
3i Group	2.9
Smith & Nephew	2.8

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The Company returned 0.20% during the month, performing broadly in line with the FTSE All-Share which returned 0.69%.

Global equity markets, while volatile, ended May close to flat with the MSCI ACWI rising only 0.1%. The volatility seen in April continued into the first three weeks of the month when global stocks recorded the longest losing streak since 2008 before rallying back to finish close to unchanged. The narrative for May remained the same with concerns focused on inflation, monetary tightening, geopolitical tensions and Covid.

As the war in Ukraine reached 100 days, inflation concerns persisted and central banks globally responded. The Fed delivered the expected +50bp rate hike to a range of 0.75-1%, its biggest interest rate increase in more than two decades, and Fed Chair Powell all but promised the same again at the next two meetings. The Bank of England increased the Bank Rate by 0.25 percentage points to 1%, India's central bank announced a surprise increase to its benchmark rate, and Australia's central bank enacted its first interest rate hike in more than a decade.

Reports of earnings guidance downgrades from large U.S. retailers Walmart and Target saw significant share price moves on the day and underscored that higher inflation is eroding profit margins through higher costs, and the challenge of predicting how consumer behaviour normalises post Covid. Covid-induced lockdowns in China continued to impact economic activity within China as well as exacerbating global supply chain pressures.

Oil rose higher than $120 a barrel as increasing prices for fuels combined with lingering concerns over supplies from Russia sent crude to its highest level in two months. Late in the month, EU leaders agreed on a plan for a partial Russian oil ban. Energy stocks have continued to outperform the market, buoyed by the geo-political landscape.

The FTSE All Share Index rose 0.69% during May; Oil & Gas, Telecommunications and Basic Materials outperformed while Technology and Utilities underperformed.

Stocks:

The Company performed broadly in-line with the benchmark during May; contribution to returns came from our stock selection in the Financials and Health Care sectors while our underweight positioning to Oil & Gas, notably BP, and security selection in Industrials detracted from performance.

Financials holdings Standard Chartered and Phoenix Group were beneficiaries of rising interest rates and were top contributors during the period. The share price of Moonpig rose after the Company announced the acquisition of 'Buyagift', owner of Red Letter Days and the Buyagift digital website, together the ‘#1 gift experiences platform' in the UK. WH Smith also rose after reporting interim results where the company demonstrated it continues to grow and has set out solid expectations for 2022/2023 with a recovery of EBIT.

When looking at the detractors from performance during the month, typically these were holdings caught up in the broader sell-off of well-held names in the market as inflation concerns and geopolitical tensions persisted rather than any stock-specific news. Accordingly, RS Group, formerly Electrocomponents, and Rentokil were top detractors during the period. Integrafin, the tech platform for IFAs, reported strong second quarter net flows, however, it was disappointing to see a meaningful cost increase as the company continues to invest in its technology. Drax also detracted from performance during the month due to weakness in the Utilities sectors on the back of concerns of a proposed windfall tax on power generators.

Portfolio Activity:

During the month, EuroAPI spun off from Sanofi; this is a holding where we received an allocation post spin-off and subsequently added to it as we are excited by its prospects as an independent entity. We also purchased a new holding in Ashmore Group, the asset management company specializing in emerging debt. We view Ashmore as a quality company with a strong balance sheet at an attractive valuation that is well placed for when its asset class turns. We reduced Rio Tinto and Standard Chartered after strength in the shares.

Outlook

At the time of writing, we are conscious that there is an ongoing invasion in Europe – and whilst we reference its investment implications, we must also recognize the tremendous human suffering and implications for humanity. The Russian invasion of Ukraine has not only partly contributed to the volatility markets have been experiencing in 2022, but also underpinned a range of macroeconomic developments. The backdrop for global equities therefore, in our view, is mixed. Although demand remains strong, the outlook for corporate revenue and earnings growth is likely to worsen over the course of 2022 as the potential negative jaws of rising oil prices and rates, raises the spectre once again of Stagflation. It is still likely that government stimulus is retracted, and monetary policy is tightened in the face of more persistent inflationary pressures. It will be incredibly important to focus on companies with strong, competitive positions, at attractive valuations that can deliver in this environment.

Central banks, universally across the developed world, have started the year in a far more hawkish manner and as a result, market expectations for higher rates and faster quantitative tightening have risen considerably. Time will tell whether the war impacts the growth outlook and therefore the hawkishness of central banks. We still do not know whether the current inflationary trends are the temporary impact from the significant Covid stimulus, the unwinding of extreme Covid behaviours, a more structural shift in the cost of labour, the impact on costs from the decarbonisation agenda or a combination of the above. It is difficult to have a high degree of confidence on the outcome but we would note, given the uncertainty, there is a rising risk of a policy mistake; either being too late to tighten and/or tightening too hard. We expect this, and the geopolitical ramifications of the Ukraine war, to prevail through 2022 and beyond.

The strain on supply chains, caused by strong economic activity overwhelming Covid afflicted capacity and restricted labour availability, will continue to provide inflationary pressures which can squeeze companies’ margins. As a reminder, we continue to concentrate the portfolio on businesses with pricing power and durable, competitive advantages as we see these as best placed to protect margins and returns over the medium and long-term. However, a notable feature of our conversations with a wide range of corporates in 2021 was the ease with which they were able to pass on cost increases and protect or expand margins.  Management teams have pointed to robust demand, prioritisation of security of supply as well as well-publicised supply chain disruption and cost pressures. However, we believe that as some of the transitory inflationary pressures start to fade (e.g. commodity prices, supply chain disruption) then pricing conversations will become more challenging. We are also increasingly focused on wage inflation which may be more structural and yet, in our experience, harder to pass on. Corporates have already pointed to wages picking up, the introduction of bonuses and growing pressure on employee retention rates as competition for labour intensifies. We therefore believe that employee retention will be an important differentiator in 2022 given the productivity benefits of a stable workforce as labour market tighten further.

We also note the UK’s relative valuation discount to global equity markets has continued to widen over the course of 2022, despite the resurgence in takeover activity as bidders capitalise on this arbitrage. Specifically, we’ve seen acquisitions of real assets and a desire to find unlevered free cash flow. As we move into 2022, we see cash generation continuing to improve and dividends payments recovering; broadly speaking we've been surprised by how quickly dividends have come back with large contributions from the mining sector where the likes of Rio Tinto and BHP have been able to pay large special dividends. While most companies are paying dividends once more, we note the large contribution from special dividends that may not persist. That said, as the highest dividend yielding market in the developed world, we see the fundamental valuation of the UK as attractive. We also view the outlook for ordinary dividends for the UK market with optimism as most companies have emerged from the Covid crisis with appropriate dividend policies.

We continue to have conviction in cash generative companies with durable competitive advantages, exceptional management teams and underappreciated growth potential. At present, whilst we are excited by the attractive stock-specific opportunities on offer, we continue to approach the year with balance in the portfolio.

22 June 2022