BlackRock Income and Growth Investment Trust plc (LON:BRIG) has announced its latest portfolio update.
All information is at 31 October 2024 and unaudited.
For more information on the BlackRock Income and Growth Investment Trust, please visit: www.blackrock.com/uk/brig
Performance at month end with net income reinvested
| OneMonth | ThreeMonths | OneYear | ThreeYears | FiveYears | Since1 April2012 | |
| Sterling | ||||||
| Share price | -4.2% | -2.8% | 13.2% | 13.8% | 18.5% | 163.0% |
| Net asset value | -1.6% | -2.9% | 18.1% | 21.4% | 31.9% | 195.9% |
| FTSE All-Share Total Return | -1.6% | -2.5% | 16.3% | 19.7% | 31.9% | 308.8% |
| 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: | 217.62p |
| Net asset value – cum income*: | 222.11p |
| Share price: | 193.50p |
| Total assets (including income): | £47.7m |
| Discount to cum-income NAV: | 12.9% |
| Gearing: | 3.1% |
| Net yield**: | 3.9% |
| Ordinary shares in issue***: | 19,692,612 |
| Gearing range (as a % of net assets): | 0-20% |
| Ongoing charges****: | 1.28% |
| * Includes net revenue of 4.49 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 3.7% and includes the 2023 final dividend of 4.80p per share declared on 21 December 2023 with pay date 15 March 2024, and the Interim Dividend of 2.70p per share declared on 20 June 2024 with pay date 29 August 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. In addition, the Company’s Manager has also agreed to cap ongoing charges by rebating a portion of the management fee to the extent that the Company’s ongoing charges exceed 1.15% of average net assets. | |
| Sector Analysis | Total assets (%) |
| Support Services | 9.9 |
| Banks | 8.9 |
| Media | 8.0 |
| Real Estate Investment Trusts | 6.9 |
| Pharmaceuticals & Biotechnology | 6.9 |
| Oil & Gas Producers | 6.1 |
| General Retailers | 5.6 |
| Mining | 5.6 |
| Financial Services | 5.5 |
| Nonequity Investment InstrumentsTravel & Leisure | 4.83.5 |
| Household Goods & Home Construction | 3.5 |
| Personal Goods | 3.4 |
| Industrial Engineering | 3.2 |
| Nonlife Insurance | 2.5 |
| Gas, Water & Multiutilities | 2.5 |
| Food Producers | 2.4 |
| Tobacco | 1.6 |
| Electronic & Electrical Equipment | 1.4 |
| Life Insurance | 1.4 |
| General Industrials | 0.9 |
| Net Current Assets | 5.5 |
| —– | |
| Total | 100.0 |
| ===== | |
| Country Analysis | Percentage |
| United Kingdom | 90.7 |
| United States | 2.1 |
| Switzerland | 1.7 |
| Net Current Assets | 5.5 |
| —– | |
| 100.0 | |
| ===== | |
| Top 10 holdings | Fund % |
| AstraZeneca | 6.2 |
| RELX | 5.6 |
| Shell | 5.4 |
| Rio Tinto | 4.2 |
| HSBC Holdings | 3.9 |
| 3i Group | 3.8 |
| Unilever | 3.5 |
| London Stock Exchange Group | 3.2 |
| Standard Chartered | 3.0 |
| Pearson | 2.8 |
Commenting on the markets, representing the Investment Manager noted:
Performance Overview:
The Company returned -1.6% during the month net of fees, performing in-line with the FTSE All-Share Index which returned -1.6%.1
Market Summary:
Equity markets were active in October, filled with corporate earnings and economic data releases, whilst investors paid close attention to the upcoming US Presidential Election and the potential implications of a policy shift on inflation and interest rates. Stock market volatility picked up, despite global equities briefly notching a new high mid-month, on track for their biggest annual gain this century. However, US stock market momentum faded and poor earnings releases from the technology sector saw global MSCI equity markets ending -2.2% as a result.
In the US, equity markets continued their upward trend for the first 30 days, driven by optimism surrounding corporate earnings and expectations of future Federal Easing. On the final day of October, the S&P 500 was poised to post its biggest annual gain this century, when the final day of trading saw global market tech selloffs wipe out October gains for the S&P500 and NASDAQ. US stocks chalked up their biggest daily drop in nearly two months as tech stocks tumbled, leaving the S&P500 to close the month down c.1%, ending a 5-month winning streak. All of the `Mag 7′ stocks closed lower on the final day of trading, whilst utilities led returns as investors favoured relatively defensive stocks.
In Europe, the STOXX600 closed -3.4% for the month, seeing a 1.2% drop in the final day after bleak corporate earnings, with many companies citing anaemic Chinese demand as the driver of earnings misses, and as investors await more clarity on the U.S. election outcome. Technology stocks were among the worst-hit, as U.S. tech giants disappointed on earnings later in October, and key profit warnings halfway through the month took many semi-sector stocks down as a result.
The FTSE All-Share Index returned -1.64% for the month, and the FTSE 100 Index returned -1.45%, with healthcare and consumer staples leading the underperformance. In the UK, equity markets prepared themselves for a tax, borrow, spend Budget in late October, which did not disappoint. Gilt yields, which had risen in anticipation, continued to rise in the immediate aftermath of the budget, whilst sterling was modestly weak. The UK AIM market was up 4% on the day, likely a relief rally as markets had feared a complete scrapping of inheritance tax relief for the market, which only saw a 50% reduction on the day.
Stock comments
Standard Chartered was the top contributor to performance, after the company reported strong third quarter results, c.20% ahead of consensus. Following a lengthy transition period, which saw the company shrink its balance sheet and geographical exposures, focusing on its core competencies and strongest market shares, the company is once again on the front foot. Growth and cashflow have improved considerably, with sizable buybacks now accompanying an improving growth backdrop.
Pearson was another top positive contributor, delivering higher education growth +4% for the quarter, with higher education returning to growth after the last 18 months. The company continues to improve its execution under its new CEO delivering modestly improved growth and earnings.
Hays was the largest detractor to performance, with first quarter earnings released midway through October suggesting a continuation of tough market conditions. Shares fell over concerns of a recovery being pushed into next year, and because of a subdued trading backdrop for the rest of the year.
Property companies, including Segro and Great Portland, detracted from performance as rising rates and fears of inflation pressured share prices. This despite a notably strong trading statement from Great Portland during the month highlighting high single digit leasing growth as demand continues to outstrip supply in London Offices.
Changes
We added to Shell and reduced BP on the back of diverging capex spends between the two companies, and our belief in management.
Outlook
Global developed equity markets have continued their broad rallies through 2024 following a trend that started in late 2023. Following a lengthy period of uncertainty through the covid era, with sharply rising rates and inflation, equity markets have now settled down. Having passed peak rates, and with moderating inflation, stable labour markets and broadly stable macroeconomic conditions, markets have moved to `goldilocks territory. The promise of greater fiscal spending in the US, China and parts of Europe have served to buoy equity markets further, although have contributed to rising government bond yields as the spectre of fiscal deficits and inflationary pressure loom large for bond investors.
More recently, following a period of extended economic weakness, the Chinese Government have begun a more concerted accommodative campaign aimed at accelerating economic growth and arresting deflationary pressures. Recent policy moves have sought to improve and encourage lending into the real economy with a sizable fiscal easing programme announced. Whilst the scale of the easing is large, western markets and commentators have remained largely sceptical of its impact and effectiveness whilst awaiting evidence to the contrary. In the UK, the recent budget promised and delivered a large-scale borrowing and spending plan whilst sizable increases in minimum wage and public sector wage agreements likely support a brighter picture on the UK consumer. UK 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.
With the UK’s election and budget now over, the markets attention will turn its focus on the US election in November. The replacement of President Biden as the Democratic candidate will contribute further to the uncertainty, and we continue to expect that geopolitics will play a more significant role in asset markets. This year sees the biggest election year in history with more than 60 countries representing over half of the world’s population going to the polls. We believe political certainty now evident in the UK will 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 election outcome, we are mindful of the potential volatility and the opportunities that may result, some of which have started to emerge.
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 a robust buyback yield of the UK market. Combining this with a dividend yield of 3.5% (FTSE All Share Index yield as at 31 August 2024 source: The Investment Association), 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, we believe that in the course of time risk appetite will return and opportunities are emerging. We have identified several potential 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 that we believe offer 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 seeking to identify the companies that strengthen their long-term prospects as well as attractive turnarounds situations.
1Source: BlackRock
For more information on the BlackRock Income and Growth Investment Trust, please visit: www.blackrock.com/uk/brig
