Portfolio Update

The information contained in this release was correct as at 31 March 2023. 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 March 2023 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	1.3%	3.5%	8.7%	48.1%	23.1%	117.6%
Net asset value	-3.0%	4.1%	3.9%	44.9%	26.2%	110.7%
FTSE All-Share Total Return	-2.8%	3.1%	2.9%	47.4%	27.8%	105.4%
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:	203.79p
Net asset value – cum income*:	206.73p
Share price:	193.00p
Total assets (including income):	£47.3m
Discount to cum-income NAV:	6.6%
Gearing:	5.6%
Net yield**:	3.8%
Ordinary shares in issue***:	20,953,251
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.2%
* Includes net revenue of 2.94 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 3.8% and includes the 2022 interim dividend of 2.60p per share declared on 22 June 2022 with pay date 1 September 2022 and the 2022 final dividend of 4.70p per share declared on 1 February 2023 with pay date 15 March 2023.
*** excludes 10,081,532 shares held in treasury.
**** The Company’s ongoing charges are calculated as a percentage of average daily net assets and using management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for the year ended 31 October 2022.

Sector Analysis	Total assets (%)
Support Services	11.3
Pharmaceuticals & Biotechnology	10.5
Oil & Gas Producers	8.9
Media	7.9
Household Goods & Home Construction	7.2
Banks	7.0
Financial Services	6.7
Mining	6.5
General Retailers	4.2
Personal Goods	4.2
Health Care Equipment & Services	3.0
Electronic & Electrical Equipment	2.8
Life Insurance	2.8
Food Producers	2.7
Nonlife Insurance	2.4
Tobacco	2.2
Travel & Leisure	1.5
Gas, Water & Multiutilities	1.4
Fixed Line Telecommunications	1.3
Real Estate Investment Trusts	1.1
Leisure Goods	1.1
Net Current Assets	3.3
	-----
Total	100.0
	=====
Country Analysis	Percentage
United Kingdom	90.3
Switzerland	2.5
United States	2.2
France	1.7
Net Current Assets	3.3
	-----
	100.0
	=====
Top 10 holdings	Fund %
AstraZeneca	7.6
Shell	7.1
RELX	5.2
Reckitt Benckiser	4.8
Rio Tinto	4.2
3i Group	4.1
Unilever	3.0
Smith & Nephew	3.0
Phoenix Group	2.8
Pearson	2.7

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The Company returned -3.0% during the month, performing broadly in-line with the FTSE All-Share which returned -2.8%.

The FTSE All Share Index fell -2.84% during the month with Oil & Gas, Financials and Telecommunications as top underperforming sectors while Utilities and Health Care outperformed. March was a tumultuous month as a drop in the oil price lead oil major’s share prices lower and the emergence of financial cracks spurred a crisis of confidence in the banking sector.

A run-on bank deposits in the US caused by liquidity concerns resulted in the collapse of Silicon Valley Bank and Signature Bank. The ripple effect extended to European banks resulting in the rescue of Credit Suisse by UBS and the Swiss government.

The U.S. February CPI report showed that core inflation remained hot and topped expectations, rising 0.5% on the month. The Federal Reserve hiked rates by 25 bps to 5% and indicated that the banking troubles in the month would not stop them from tightening policy further.

The European Central Bank (ECB) stuck to its script amid a tug of war between upside data surprises and financial stability risks. An apparent crisis of confidence didn’t dissuade policymakers from following through on earlier guidance, raising the ECB’s key policy rate by 50 bps to 3.0%. Policymakers at the Bank of England (BoE) followed their central banking peers in delivering on market expectations, raising their key rate by 25 bps to 4.25%, while telegraphing a cautious, data-driven path ahead.

Stocks:

Despite negative absolute performance, the Company modestly outperformed its benchmark in March. There were two notable statements during the month from 3i and Rentokil. 3i delivered another strong progression in asset value which was above market expectations given the continued strong performance of Action, the European discount retailer. Rentokil’ s full year results were positive; both organic revenue and profits beat forecasts and the company raised their medium-term aspirations for growth and margins. The integration of the Terminix acquisition is progressing well at Rentokil and we are impressed by progress to date; the company has raised their cost synergy target and see further opportunities to improve operational execution. Shares responded positively to the results.

RELX was another top contributor during the period; shares benefitted from a rotation into more defensive names within the market. We note that RELX continues to invest in its business which allow it to accelerate revenue growth. Its data, analytics and tools help its customers make better decisions at lower cost and this has, over time, benefited revenue trends in its risk and academic publishing businesses; more recently, the Legal division has delivered faster growth.

Standard Chartered was a top detractor from performance during the period as financial stresses in the US regional banks and Credit Suisse drove a derating across the banking sector. The outlook for earnings has been negatively impacted by a downward shift in the yield curve as well as fears that increased risks to economic growth will impact loan growth and provisioning.

Phoenix Group was also impacted by broader weakness in the Financials sector and the small holding in EuroAPI was another top detractor as the company delivered a weaker statement.

Changes:

During the month, we purchased a new holding in the insurance company Admiral which we believe is well positioned to benefit as the motor insurance cycle emerges from several quarters of depressed volatility. Price rises combined with stabilising inflation should lead to improving profitability with Admiral as both the market leader and strongest underwriter in this space. We also fully exited or remaining small position in Moonpig.

Outlook:

Inflation has consistently surprised in its depth and breadth, driven by resilient demand, supply chain constraints, and most importantly by rising wages in more recent data. Central banks across the developed world continue to unwind ten years of excess liquidity by tightening monetary policy desperate to prevent the entrenchment of higher inflation expectations. Meanwhile, March saw the first signs of financial stress with the bankruptcy of Silicon Valley Bank and Signature bank in the US serving to highlight the potential issues of the aggressive retrenchment of liquidity.  Whilst the ramifications of this crisis remain unclear, it is likely that credit conditions and the availability of credit will continue to recede. This strengthens our belief that companies with robust balance sheets capable of funding their own growth will outperform. 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. We are conscious of the impact this has 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. We also see the potential for longer-term inflationary pressure from decarbonisation and deglobalisation, the latter as geopolitical tensions rise more broadly across the world.

We would expect broader demand weakness although the ‘scars’ of supply chain disruption are likely to support parts of industrial capex demand as companies seek to enhance the resilience of their supply chains. A notable feature of our conversations with a wide range of corporates has been the ease with which they have been able to pass on cost increases and protect or even expand margins during 2022 as evidenced by US corporate margins reaching 70-year highs. We believe that as demand weakens and as the transitory inflationary pressures start to fade during 2023 (e.g. commodity prices, supply chain disruption) then pricing conversations will become more challenging despite pressure from wage inflation which may prove more persistent. While this does not bode well for margins in aggregate, we believe that 2023 will see greater differentiation as corporates’ pricing power will come under intense scrutiny.

The UK’s policy has somewhat diverged from the G7 in fiscal policy terms as the present government attempts to create stability after the severe reaction from the “mini-budget”. The early signs of stability are welcome as financial market liquidity has increased and the outlook, whilst challenged, has improved. Although the UK stock market retains a majority of internationally weighted revenues, the domestic facing companies have continued to be impacted by this backdrop, notably financials, housebuilders and property companies. The valuation of the UK market remains highly supportive as currency weakness supports international earnings, whilst domestic earners are in many cases at COVID or Brexit lows in share price or valuation terms. Although we anticipate further volatility ahead as earnings estimates moderate, we know that in the course of time, risk appetites will return and opportunities are emerging.

We continue to focus the portfolio on cash generative businesses with durable, competitive advantages boasting strong leadership as we believe these companies are best-placed to drive returns over the long-term.  We anticipate economic and market volatility will persist throughout the year and we are excited by the opportunities this will likely create by identifying those companies using this cycle to strengthen their long-term prospects as well as attractive turnarounds situations.

19 April 2023