Portfolio Update

The information contained in this release was correct as at 31 October 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 October 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	-2.5%	-3.5%	8.1%	22.9%	17.5%	103.5%
Net asset value	-5.9%	-6.5%	5.2%	34.1%	19.9%	101.1%
FTSE All-Share Total Return	-4.1%	-4.8%	5.9%	39.4%	21.1%	99.8%
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:	190.91p
Net asset value - cum income*:	194.90p
Share price:	178.00p
Total assets (including income):	£44.2m
Discount to cum-income NAV:	8.7%
Gearing:	7.8%
Net yield**:	4.1%
Ordinary shares in issue***:	20,603,486
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.18%
* Includes net revenue of 3.99 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 2022 final dividend of 4.70p per share declared on 1 February 2023 with pay date 15 March 2023, and the 2023 Interim Dividend of 2.60p per share declared on 21 June 2023 with pay date 1 September 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 (%)
Oil & Gas Producers	11.0
Support Services	10.0
Pharmaceuticals & Biotechnology	9.0
Mining	8.7
Household Goods & Home Construction	7.6
Financial Services	7.1
Media	7.0
Banks	6.4
General Retailers	4.4
Personal Goods	4.2
Nonlife Insurance	3.0
Real Estate Investment Trusts	2.8
Life Insurance	2.5
Food Producers	2.4
Electronic & Electrical Equipment	2.4
Health Care Equipment & Services	2.2
Tobacco	1.8
Travel & Leisure	1.8
Gas, Water & Multiutilities	1.6
Leisure Goods	1.1
Industrial Engineering	1.0
Net Current Assets	2.0
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Total	100.0
	=====
Country Analysis	Percentage
United Kingdom	92.3
United States	2.5
Switzerland	1.9
France	1.3
Net Current Assets	2.0
	-----
	100.0
	=====
Top 10 holdings	Fund %
Shell	8.7
AstraZeneca	7.1
Rio Tinto	5.8
RELX	5.4
Reckitt	4.6
3i Group	4.2
Unilever	3.4
BHP	2.9
Phoenix Group	2.5
Mastercard	2.5

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The Company returned -5.9% during the month net of fees, underperforming the FTSE All-Share which returned -4.1%.

Market Summary:

Global equity markets fell in October as geopolitical uncertainty due to the Israel-Hamas conflict and the prospect of higher-for-longer interest rates weighed on market sentiment.

In the UK, inflation proved persistent as the September figure showed the annual rate stuck at 6.7%1 as lower prices in food and drink were offset by higher oil prices. The FTSE All Share fell -4.1% during October with Financials, Health Care and Industrial as top underperforming sectors; Utilities was the only sector that outperformed. 

In the US, the 10-year Treasury yields reached 16-year highs above 5%2 and stocks hit five-month lows. Technology stocks underperformed on some disappointing earnings, while regional bank shares broadly hit new lows for the year. US Core Personal Consumption Expenditure (PCE) data, the Federal Reserve's preferred inflation gauge, softened in September on falling goods prices. In addition, strong consumer spending drove a stronger-than-expected rise in Q3 GDP.

In the Eurozone, the outlook continued to be pessimistic as the Eurozone composite Purchasing Managers' Index (PMI) fell to a 35-month low of 46.52 in October3. In addition, the European Central Bank's survey of banks showed a continued contraction in the supply of credit to households and businesses from European banks.

In China, the economy's gross domestic product grew in the third quarter, beating market expectations but was still short of the country's full year target. China continued to see weakness in the real estate sector and the US further tightened export controls for artificial intelligence chips to China.

Contributors to performance:

Rentokil was the top detractor from performance during the period after reporting a weak trading statement. US organic growth of 2.3% (2.7% ex-products) disappointed and represents a slowdown from 4.1% last quarter. The company pointed to the weak macro/consumer environment making it hard to acquire new customers. This weaker revenue led to lower margin expectations for the US - down to 18.5-19% from c.19.5% previously. In contrast, the rest of the group has performed better than expected which limited any downgrades to 1-2%.

Standard Chartered also released a weaker trading statement due largely to three reasons; lower net interest margin (NIM) and weaker than expected balance sheet growth, increased provisions against their Chinese real estate exposure, and a write-down of the Bohai stake. The positive was a modest beat on capital but there was no incremental buy-back announced. NatWest also delivered weak results with lower guidance on NIM due to the pricing of deposits.

The share price of RELX rose during the month and the company was the top positive contributor to performance. The company released a steady earnings statement with Q3 growth rates for the three, major divisions matching those from the first half; Risk sustained at 8%; STM at 4%; Legal at 6%; Exhibitions at +32% which drove group growth to 8%. Pearson was another top positive contributor to performance. The company also delivered strong results with 3-4% underlying upgrades.

Rio Tinto also posted a steady trading update with output across its mining operations in line with expectations; the company was another top positive contributor.

Changes:

During the period, we added to the holdings in Segro and Big Yellow and reduced the holdings in NatWest and 3i.

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 appear modest, it is likely that credit conditions and the availability of credit will continue to deteriorate. 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.

We would expect broader demand weakness into the second half of 2023 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 was the ease with which they were able to pass on cost increases and protect or even expand margins during 2022. 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 even though pressure from wage inflation may prove more persistent. While this does not bode well for margins in aggregate, we believe that 2023 and 2024 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 challenging divergence in inflation between the UK and other developed markets has seen sterling recover some strength, notably against the dollar as markets infer higher rates for longer. 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 continues to be extremely low in absolute terms but particularly versus other developed market indices with many companies, notably the domestic earners trading 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.

In China, the re-opening of the economy post the lockdowns has been slower than expected. There are early signs that the Chinese government is looking to stimulate the economy further which may become more apparent as we enter 2024. 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.

1Source: Financial Times,18 October 2023 https://www.ft.com/content/5818da50-e1d4-4dfd-8bf8-2ba3c79e46f0

2Source: Financial Times, 27 October 2023 https://www.ft.com/content/57388c11-884e-46c5-b0d8-606b39c64888

3 Source: Office of National Statistics 24 October 2023 https://www.ft.com/content/7d6015f9-3282-42a6-a3a9-192ec68458a0

16 November 2023

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