Portfolio Update

The information contained in this release was correct as at 31 July 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 July 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	10.4%	6.3%	4.4%	10.4%	16.2%	115.7%
Net asset value	4.2%	-1.6%	4.5%	9.2%	17.3%	101.1%
FTSE All-Share Total Return	4.4%	-1.2%	5.5%	9.9%	21.5%	97.8%
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:	200.02p
Net asset value – cum income*:	201.66p
Share price:	196.00p
Total assets (including income):	£46.7m
Discount to cum-income NAV:	2.8%
Gearing:	3.0%
Net yield**:	3.7%
Ordinary shares in issue***:	21,171,914
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.2%
* Includes net revenue of 1.64 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 3.7% and includes the 2021 final dividend of 4.60p per share declared on 13 January 2022 and paid to shareholders on 17 March 2022, and the 2022 interim dividend of 2.60p per share declared on 22 June 2022 with pay date 1 September 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	12.3
Pharmaceuticals & Biotechnology	10.0
Oil & Gas Producers	8.4
Household Goods & Home Construction	7.8
Media	7.3
Life Insurance	5.8
Banks	5.7
Mining	5.1
Financial Services	4.6
Tobacco	3.4
Nonlife Insurance	3.3
Health Care Equipment & Services	2.6
Personal Goods	2.6
Electronic & Electrical Equipment	2.5
Travel & Leisure	2.4
Food Producers	2.3
General Retailers	1.7
Fixed Line Telecommunications	1.5
Gas, Water & Multiutilities	1.3
Industrial Engineering	1.1
Software & Computer Services	1.0
Electricity	0.8
Real Estate Investment Trusts	0.7
Net Current Assets	5.8
	-----
Total	100.0
	=====

Country Analysis	Percentage
United Kingdom	85.8
United States	4.6
France	3.8
Net Current Assets	5.8
	-----
	100.0
	=====
Top 10 holdings	Fund %
AstraZeneca	7.5
Shell	6.8
RELX	5.2
Reckitt Benckiser	4.8
Rio Tinto	3.8
Phoenix Group	3.7
British American Tobacco	3.4
3i Group	3.0
Rentokil Initial	2.9
Standard Chartered	2.8

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The Company returned 4.2% during the month, modestly underperforming the FTSE All-Share which returned 4.4%.

Global equity markets rose in July despite global economies feeling the impacts of both high inflation and Central Banks' attempts to curb it. Central Banks have continued to raise rates; the Fed by 75bps for the second consecutive month and the European Central Bank (ECB) by a larger than expected 50 basis points, marking the first ECB rate hike in 11 years¹.

The US economy has slowed for two consecutive quarters technically putting the US into a recession. Sentiment shifted during the period towards the view that inflation was close to peaking enabling more dovish monetary policy in due course. This prompted a recovery in global equities after heavy year-to-date losses. Global growth stocks rallied and outperformed value stocks by 6.9% over the month. Year-to-date, value stocks have still outperformed growth stocks by 12.8%². The S&P 500 rose 9.1%, its best monthly performance since November 2020. The Nasdaq rose 12.3%, its biggest monthly gain since April 2020¹ and highlighting the outperformance of information technology stocks more broadly over the month.

The outlook for European economies remains unclear given the potential for further gas disruption, the risk of energy rationing and its subsequent impact on industrial production. Gas supplies benefitted from the reopening of the Nordstream 1 pipeline, albeit at a limited capacity. However, this was followed by Russia's announcement that capacity would be further reduced to enable turbine repairs. Germany rejected this explanation, causing gas prices to rise sharply towards the end of the month in response to renewed fears of gas supply scarcity.

Emerging markets underperformed, with a -0.2% decline of the MSCI Emerging Markets Index², largely due to China's heavy weight in the index. China has shown few signs of softening the zero-covid policy with rolling lockdowns still enforced across various cities. However, positive actions were seen as Beijing opened borders for direct inbound passenger flights for the first time in two years and exports have significantly beaten expectations.

Boris Johnson resigned as the UK's Prime Minister after losing the support of his party. The Conservative leadership race was narrowed to Rishi Sunak and Liz Truss. However, the UK economy is more sensitive to global forces than the fiscal spending plans of candidates.

Stocks:

The Company’s more cyclical holdings, including RS Group and Rentokil, performed better during the month, helped by solid reporting. RS Group delivered strong results; while the market continues to be worried about the macro backdrop, the company continues to deliver strong growth benefitting from its long term investments in people, technology and product breath made over several years. Rentokil, a long-term holding for the Company, is expecting the completion of the Terminix deal in the next couple months which we believe will enhance the long-term growth opportunity giving them greater density in their existing footprint whilst opening up new geographical markets in the US to gain share. 3i continued to execute strongly, delivering an encouraging update, once again highlighting the continued strong performance of Action, its European discount retailer. Whilst we remain cautious on the backdrop for the consumer, it is clear that Action has built a strong value- based economic model and acquired a loyal and growing customer base.

Direct Line Insurance was the top detractor from performance during the period. The company fell after issuing a profit warning as claims inflation has moved ahead of pricing in the short term. We believe this is towards the bottom of the motor cycle and we would expect the industry to raise prices in the medium term to protect profitability. Smith & Nephew also detracted as a defensive share on a weak second quarter print which highlighted ongoing supply chain challenges partly as a result of COVID challenges and some self-inflicted operational issues. We continue to engage with the new CEO on his plans to improve execution. BT fell in part due to the defensive nature of the shares and the concern over the threat from competitors building out broadband network infrastructure.

Portfolio Activity:

Trading was limited ahead of results reporting. Following further disappointment around the company’s control of its cost base, we sold the remaining holding in IntegraFin.

Outlook

The headwinds facing global equity markets have grown steadily over the first half of 2022. Inflation has surprised in its depth and breadth so far, driven by ongoing COVID related disruption, the war in Ukraine, rising labour costs and the persistence of these factors. Central banks and governments are tightening monetary and fiscal policy as interest rates rise and stimulus is withdrawn. The subsequent rise in the risk-free or discount rate has many consequences, not least the pressure on valuation frameworks and, notably, on un-profitable or extremely highly valued businesses. We are mindful of this and feel it is incredibly important to focus on companies with strong, competitive positions, at attractive valuations that can deliver in this environment.

The political and economic impact of the war in Ukraine has been significant in uniting Europe and its allies, whilst exacerbating the demand/supply imbalance in the oil and soft commodity markets likely pushing inflation higher for longer. We are conscious of the impact this will likely have on the cost of energy, and we continue to expect divergent regional monetary approaches with the US being somewhat more insulated from the impact of the conflict, than for example, Europe. Complicating this further, is the continued impact COVID is having on certain parts of the world, notably China, which has used lockdowns to control the spread of the virus impacting economic activity during the first half. We also see the potential for longer-term inflationary pressure from decarbonisation and deglobalisation. It is difficult to have a high degree of confidence in how these evolve but we believe there is rising risk of a policy mistake as central banks attempt to curb inflation; too late to tighten and/or tightening too hard. We expect this, and the geopolitical ramifications of the Ukraine war, to be the prevailing debate of 2022 and beyond.

Although demand remains strong at present, the outlook for corporate revenue and earnings growth is likely to worsen over the course of 2022 as the pressure on real incomes raises the spectre once again of stagflation. 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 even expand margins. We believe that when 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 persistent 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 markets tighten further.

The FTSE 100, with a majority of international weighted revenues, high commodity weighting and low starting valuation, has proven to be a port in the storm, as one of the best performing developed markets during the first half. The FTSE 250, with its higher domestic focus and lower liquidity has suffered given the weakness in the domestic economy. We would expect the FTSE 100 to continue to be advantaged until we see a stabilisation in the domestic economy and subsequent strengthening of sterling or, more likely, a weakening of the dollar. Whilst we anticipate further volatility ahead as earnings estimates moderate, we know that in the course of time, risk appetites will return. We are currently spending time identifying our ‘wish list’ of opportunities utilising our flexible approach, experience and strong absolute valuation framework.

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. Further, we continue to have conviction in cash generative companies with 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.

¹  Source: July 2022, Financial Times https://www.ft.com/content/37e49144-2b1d-45f1-9516-73cda646261d

²  Source: July 2022, JP Morgan Monthly Market Review Monthly Market Review | J.P. Morgan Asset Management (jpmorgan.com)

17 August 2022