Portfolio Update

The information contained in this release was correct as at 31 March 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 March 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	3.7%	0.2%	12.0%	11.7%	11.7%	100.2%
Net asset value	1.0%	0.3%	11.4%	16.2%	21.8%	102.8%
FTSE All-Share Total Return	1.3%	0.5%	13.0%	16.8%	25.8%	99.5%
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:	203.54p
Net asset value – cum income*:	206.03p
Share price:	184.50p
Total assets (including income):	£47.8m
Discount to cum-income NAV:	10.5%
Gearing:	2.1%
Net yield**:	3.9%
Ordinary shares in issue***:	21,238,283
Gearing range (as a % of net assets):	0-20%
Ongoing charges****:	1.2%
* Includes net revenue of 2.49 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 3.9% 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	14.1
Pharmaceuticals & Biotechnology	8.5
Oil & Gas Producers	7.2
Mining	7.2
Media	7.1
Household Goods & Home Construction	6.8
Life Insurance	5.8
Financial Services	5.4
Banks	4.4
Nonlife Insurance	4.1
Tobacco	3.3
Travel & Leisure	2.5
Food Producers	2.4
Food & Drug Retailers	2.4
Electronic & Electrical Equipment	2.3
Health Care Equipment & Services	2.0
General Retailers	1.7
Personal Goods	1.4
Electricity	1.3
Fixed Line Telecommunications	1.2
Industrial Engineering	0.9
Software & Computer Services	0.8
Real Estate Investment Trusts	0.8
Net Current Assets	6.4
	-----
Total	100.0
	=====

Country Analysis	Percentage
United Kingdom	87.1
United States	4.0
France	2.5
Net Current Assets	6.4
	-----
	100.0
	=====
Top 10 holdings	Fund %
AstraZeneca	7.2
Shell	6.4
Rio Tinto	5.4
RELX	5.0
Reckitt Benckiser	3.9
3i Group	3.4
British American Tobacco	3.3
Electrocomponents	3.2
Phoenix Group	2.9
Legal & General Group	2.8

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The BlackRock Income and Growth Investment Trust returned 1.0% during the month, underperforming the FTSE All-Share which returned 1.3%.

Global equities recovered moderately in March to conclude a volatile first quarter of 2022. Geopolitical tensions, rising inflation, weakened consumer sentiment and record high energy prices put pressure on risk assets during the period.

High and volatile energy prices on the back of bans of Russian oil imports created headwinds for global growth while many central banks continued with their planned withdrawal of fiscal support in response to high inflation with fears of a prolonged conflict adding to the uncertainty.

The U.S. 10-year Treasury yield rose from 1.7% to 2.3% and peaked just below 2.5% in March¹, its highest level since early 2019. The Bank of England raised rates by a further 25bp to 0.75%, its third rate increase in three meetings as UK inflation accelerated to 6.2%, a 30-year high².

A significant increase in Omicron cases in China and the subsequent lockdowns in Shenzhen, Shanghai and other cities weighed on markets. To combat economic slowdown, Chinese regulators introduced further economic support near the end of March that resulted in a sharp temporary rebound in both onshore and offshore equities.

Company downgrades outnumber upgrades across the UK market in March for the first time since October 2020. The FTSE All Share rose 1.30% during the month with Health Care, Basic Materials, and Oil & Gas outperforming while Telecommunications, Consumer Services and Consumer Goods underperformed.

Stocks:

Rio Tinto and BHP were top contributors during the month benefitting from strength in the Basic Materials sector due to the strength in commodity prices. Pearson also contributed to performance after the company was bid for even though the bid has subsequently fallen away. AstraZeneca rose given strength in the defensive Health Care sector and positive news-flow around its Covid drug and oncology pipeline.

Several of the top detractors during the period were impacted by growing concerns around a downturn in the economic backdrop and impending consumer weakness given rising inflationary pressures; these included Reckitt Benckiser, Hays and Taylor Wimpey. Smith & Nephew also detracted having had a slow start to the year facing lingering Covid-related concerns.

Portfolio Activity:

We have reduced our holding in Ferguson; the company has significantly benefited from supply chain shortages and challenges raising concerns regarding the sustainability of profits especially if commodity prices were to fall. We used some of the proceeds of the Ferguson reduction to purchase a new holding in Ashtead, the US focused equipment rental company, which continues to offer attractive structural growth and taking advantage of share price weakness in recent months.

Outlook:

We are conscious that, at the time of writing, there is a significant conflict and human suffering. Whilst we reference the investment implications of this, we recognise the huge impact on those people affected. The Russian invasion of Ukraine has contributed to not just the volatility of 2022, but also the range of outcomes. 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 conflict impacts the growth outlook and therefore the hawkishness of central banks. It is also more likely we will see increasingly divergent regional monetary approaches with the US being somewhat more insulated from the impact of the conflict, than Europe for example.  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 be the prevailing debate of 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, 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 further 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.

¹Source: 22 March 2022, Investment Week:
(https://www.investmentweek.co.uk/news/4046945/us-treasury-yields-rise-levels-seen-2019-reports)

² Source: 23 March 2022, Financial Times:
(https://www.ft.com/content/acbb1c87-0ea0-484f-978c-4e3483337c8b#post-f282d75c-1076-4a6f-97ba-fc3cd659195e)

25 April 2022