Results analysis from Kepler Trust Intelligence

BlackRock Income and Growth Investment Trust plc
LEI – 5493003YBY59H9EJLJ16

Results analysis from Kepler Trust Intelligence

• BlackRock Income and Growth Investment Trust (BRIG) released its final results for the year ending 31 October 2020 on Monday this week, reporting a decline of 16.7% in NAV terms.

• The trust outperformed its benchmark, the FTSE All-Share index, which lost 18.6% over the same period and has delivered very strong absolute returns since the end of the period; the share NAV and share price are up by 17.1% and 10.2% respectively to 28 January 2021 (all performance figures are in sterling with dividends reinvested).

• At a share price level, BRIG returned -14.8%, as the discount narrowed over the period to a premium of 0.5% (to 31 October 2020).

• The board is proposing a final dividend per share of 4.60 pence, giving total dividends for the year of 7.20 pence per share. This is despite earnings per share falling and maintains the dividend at the same level as the prior year (2019: 7.20 total dividend pence per share).

  Kepler View

  Although the final numbers are negative over the reporting period, we see this as a strong set of results from a trust sitting in arguably one of the hardest hit sectors during the COVID-19 pandemic. Moreover, since the results period ended the trust has seen performance rebound strongly with the NAV and share price up by 17.1% and 10.2% respectively to 28 January 2021.

  Over the past twelve months, ending 29 January 2021, the trust delivered NAV total returns of -9.5%, outperforming the benchmark by 1.8%, and sitting largely in line with the AIC and IA peer groups according to Morningstar.

  The reasons for BRIG’s resilience are twofold. The managers started 2020 with relatively defensive portfolios, as they believed there to be a decoupling between valuations and earnings growth. This caused them to be cautious in the weeks leading up to the crisis, such that they significantly reduced the cyclicality and gearing of the portfolio. This meant the trust was less exposed to some of the hardest hit areas of the UK market, and wasn’t highly leveraged like others. The second reason for the strong performance was due to the managers’ ability to capitalise on the opportunities that arose during the COVID correction. They used the extreme market sell-off to improve the quality of the portfolio and to recycle capital into businesses where they saw stronger growth and dividend prospects in the medium-term…

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