BlackRock Income and Growth Investment Trust Plc Portfolio Update
18 Gennaio 2024 - 3:22PM
UK Regulatory
TIDMBRIG
The information contained in this release was correct as at 31 December 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 December 2023 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five Since
Month Months Year Years Years 1 April
2012
Sterling
Share price 2.7% 2.5% 1.7% 22.4% 28.3% 113.8%
Net asset value 5.2% 4.3% 10.1% 26.2% 40.9% 122.9%
FTSE All-Share Total Return 4.5% 3.2% 7.9% 28.1% 37.7% 115.0%
Source: BlackRock
BlackRock took over the investment management of the Company with effect from 1
April 2012.
At month end
Sterling:
Net asset value - 210.57p
capital only:
Net asset value - 216.02p
cum income*:
Share price: 187.00p
Total assets £48.3m
(including
income):
Discount to cum 13.4%
-income NAV:
Gearing: 5.9%
Net yield**: 4.0%
Ordinary shares in 20,521,536
issue***:
Gearing range (as 0-20%
a % of net
assets):
Ongoing 1.28%
charges****:
* Includes net
revenue of 5.45
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 2023 Interim
Dividend of 2.60p
per share declared
on 21 June 2023
with pay date 1
September 2023,
and the 2023 final
dividend of 4.80p
per share declared
on 21 December
2023 with pay date
15 March 2024.
*** 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 2023.
Sector Analysis Total assets (%)
Support Services 10.2
Mining 9.0
Oil & Gas Producers 8.6
Pharmaceuticals & Biotechnology 8.6
Financial Services 7.9
Household Goods & Home Construction 7.2
Banks 6.5
Media 6.3
General Retailers 4.2
Personal Goods 3.8
Real Estate Investment Trusts 3.6
Life Insurance 3.2
Nonlife Insurance 3.0
Food Producers 2.8
Electronic & Electrical Equipment 2.8
Health Care Equipment & Services 2.3
Travel & Leisure 2.3
Tobacco 1.6
Gas, Water & Multiutilities 1.3
Industrial Engineering 1.0
Leisure Goods 0.9
Net Current Assets 2.9
-----
Total 100.0
=====
Country Analysis Percentage
United Kingdom 91.5
United States 2.4
Switzerland 1.9
France 1.3
Net Current Assets 2.9
-----
100.0
=====
Top 10 holdings Fund %
AstraZeneca 6.7
Shell 6.6
Rio Tinto 5.9
RELX 4.8
3i Group 4.4
Reckitt 4.1
Phoenix Group 3.2
BHP 3.1
Unilever 2.8
Hays 2.8
Commenting on the markets, representing the Investment Manager noted:
Performance Overview:
The portfolio returned 5.2% during the month net of fees, outperforming the FTSE
All-Share which returned 4.5%.
Market Summary:
The month of December proved to be a strong close for the year for equities
globally. Continued falls in inflation drove expectations of central bank pivots
in 2024. This has resulted in a further decline in the US 10-year treasury rate
from 4.95% to 3.88%1 in one month, and a broad rally for equity markets.
In the US, the S&P 500 Index hit its highest level in almost two years after the
Federal Reserve (Fed), in its last meeting of the year, indicated its
willingness to cut interest rates in 2024. Although the US payrolls data in
November painted a picture of a labour market gradually cooling, wage growth was
still too high to be consistent with inflation falling back to the Fed's 2%
policy target and the unemployment rate ticked lower. In addition, though the US
Consumer Price Index (CPI) for November largely matched expectations, it showed
that core services inflation was proving to be sticky.
The European Central Bank (ECB) and the Bank of England (BOE) signalled that
interest rate cuts remained some way off. In Europe, policymakers stuck to the
script of policy being set at sufficiently restrictive levels for as long as
necessary.
In the UK, inflation fell to a two-year low of 3.9%2, markets predicted BOE
interest rate cuts in 2024. The FTSE All Share rose 4.52% during the month with
Financials, Industrials and Consumer Services as top performing sectors.
Contributors to performance:
December was a strong month of returns as markets reacted favourably to the
assumption that rates have peaked which resulted in a rotation into cyclicals,
therefore, the portfolio's exposure to Financials and Basic Materials performed
well. This included insurer, Phoenix and asset manager, Ashmore along with
miners, BHP and Rio Tinto. Conversely, utility company, Centrica was a top
detractor from relative performance during the period as the share price
reversed post previous strength.
Private equity and venture capital company, 3i was a top positive contributor to
performance during the period. The company has been a remarkable performer over
the year and continued to make further progress in the fourth quarter as the
performance of Action, its largest asset, continued to impress: like-for-like
sales for the first nine months of the year grew by over 19%, driven primarily
by footfall, as it continued to extend its pricing advantage over its
competitors; the self-funded store roll-out programme has contributed a further
10% to growth.
Games Workshop, British manufacturer of miniatures and related content, released
Q2 results that were in-line, however, the market was hoping for upgrades and
for more detail on its licensing discussions with Amazon. The company has since
made progress with Amazon contract albeit the partnership is still very early
stage.
Changes
During the period, we reduced positions in Schneider Electric, 3i, Next and RELX
after share price strength and we added to Hays, Tate & Lyle and WH Smith. While
WH Smith retains its UK high-street business, the emphasis in recent years has
shifted to its fast-growing travel business, notably, in airports where the
company has had good traction in US and Europe; we believe this pipeline
continues to look strong and attractive.
Outlook
Equity markets entered 2024 in buoyant mood following a strong and broad rally
in the latter part of 2023. The outlook, and optimism, is a far cry from 12
months ago, when supply chains were hugely disrupted, inflation was double digit
and well ahead of central banks' targets prompting rapid and substantial
interest rates hikes despite an uncertain demand environment. Despite this,
equities had one of their best years on record, outperforming bonds with double
digit increases, in dollar terms, across most of the developed world and indeed,
some emerging markets as well. In the US, the Nasdaq was the standout rising 54%
driven by the largest seven companies that rebounded strongly (+c.70%) after a
poor 2022, when they had fallen 39% as a group. The FTSE All Share returned 7.9%
in 2023. Interestingly, over and two year period of 2022 and 2023, both the UK
and US arrived at a similar place having returned 9% and 3% respectively despite
very different journeys. China was the surprise negative in 2023, with no
noticeable COVID re-opening recovery and lacklustre growth despite government
attempts to stimulate.
As we enter 2024, markets have shifted to `goldilocks' territory whereby slowing
inflation has signalled the peak for interest rates while broad macroeconomic
indicators that have been weak are not expected to deteriorate further. This is
also helpful for the cost and availability of credit which has been recently
improving having been deteriorating through most of 2023. During December, bond
markets had begun to price in 130bps of easing in the US and a not dissimilar
amount in the UK and Europe. Whilst not unrealistic, we believe that this
quantum of cuts may prove overly aggressive without a significant deterioration
in the economy. Notably, the BoE remains staunchly hawkish as their December
meeting showed. Labour markets remain resilient for now with low levels of
unemployment while real wage growth is supportive of consumer demand albeit
presenting a challenge to corporate profit margins.
Notably in 2024, geopolitics will play a more significant role in asset markets.
This year will see the biggest election year in history with more than 60
countries representing over half of the world's population; c.4 billion people,
going to the polls. While most, such as the UK's are unlikely to have globally
significant economic or geopolitical ramifications, others, such as the
Taiwanese elections on the 13th January or the US elections in November could
have a material impact. We believe political certainty may be helpful for the UK
and address the UK's elevated risk premium that has persisted since the damaging
Autumn budget of 2022. Whilst we do not position the portfolios for any
particular election outcome, we are mindful of the potential volatility and the
opportunities that may result.
As we have commented several times before, the UK stock market continues to
remain depressed in valuation terms relative to other developed markets offering
double-digit discounts across a range of valuation metrics. This valuation
`anomaly' saw further reactions from UK corporates with the buyback yield of the
UK, at the end of the period, standing at a respectable c.2.5%. Combining this
with a dividend yield of c.4%, the cash return of the UK market is attractive in
absolute terms and comfortably higher than other developed markets. Although we
anticipate further volatility ahead as earnings estimates moderate, we know that
in the course of time, risk appetite will return, and opportunities are
emerging. As we have stated above, we have identified a number of opportunities
with new positions initiated throughout the year in both UK domestic and midcap
companies.
We continue to focus the portfolio on cash generative businesses with durable,
competitive advantages as we believe these companies are best placed to drive
returns over the long-term. Whilst we anticipate economic and market volatility
will persist throughout the year, we are excited by the opportunities this will
likely create, by identifying the companies that strengthen their long-term
prospects as well as attractive turnarounds situations.
1Source: Bloomberg, December 2023. https://www.bloomberg.com/markets/rates
-bonds/government-bonds/us
2Source: Financial Times, December 2023. https://www.ft.com/content/b27ae951
-df80-41eb-8058-f8313ce8648e
18 January 2024
This information was brought to you by Cision http://news.cision.com
END
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