Blackrock I&g Regulatory News (BRIG)

The information contained in this release was correct as at 31 March 2024. 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 2024 and unaudited.

Performance at month end with net income reinvested

BlackRock took over the investment management of the Company with effect from 1 April 2012.

At month end

Sterling:

Commenting on the markets, representing the Investment Manager noted:

Performance Overview:

The portfolio had returned by 4.83% during the month net of fees, performing broadly in-line with the FTSE All-Share which returned by 4.75%.

Market Summary:

Global equity markets nudged higher in March as the dovish backdrop set up by the world's major central banks helped boost risk sentiment.

In the US, the Federal Reserve (Fed) signalled its inclination to cut rates, assuaging market concerns by keeping the three rate cuts pencilled in for the year unchanged, even as it revised up growth and inflation forecasts. As such, the S&P 500 hit a record high as investor sentiment continued to remain positive. The economy added 275,0001 jobs in February as an uptick in immigration added to labour supply, enabling the economy to sustain a higher pace of job creation than estimated.

In the Eurozone, inflation slowed to 2.6%2 year-over-year in February, the lowest rate in three months but still above the European Central Bank's (ECB) target of 2%. The European Central Bank maintained its interest rates at historically high levels during its March meeting, as policymakers balanced concerns over a looming recession with persistently elevated underlying inflationary pressures.

In the UK, the Bank of England (BoE) kept interest rates on hold. The inflation rate fell sharply in February with headline inflation lower than forecasted at 3.5%, the lowest rate since 2021, while core inflation fell to 4.5% from 5.1%. The Office for National Statistics reported the consumer prices index rose by 3.4% in the previous month up from 4% year-on-year3.

The FTSE All Share rose 4.75% with Basic Materials, Oil & Gas and Financials as the top performing sectors.

Stock comments

Shares in Reckitt Benckiser performed poorly during the month. The company's results for 2023 were worse than expected: volume weakness was compounded by a product recall and an understatement of trade spend in the Middle East led to a further shortfall. The news flow deteriorated with an adverse jury ruling in the US; whilst the company has staunchly defended its position and intends to appeal, we have seen that litigation can create an overhang for many months and the shares are likely to remain optically cheap whilst this remains. Shares in RELX fell back after previous strength post strong results. Hays was weak during the month as cyclical concerns on recruitment rose.

3i's annual update on the performance of Action, the European discount retailer, provided welcome news on both current trading and its future prospects. Volume growth continues to exceed expectations as customers benefit from reinvestment in prices and as the group continues to open stores in existing and new countries. Margins remain robust and the group is able both to sustain strong like-for-likes and growing dividends to its shareholders.

Next produced strong financial results and underpinned confidence in the year ahead with the structural challenges of recent years now beginning to fade. The Retail channel has become less of a headwind as competitors have closed stores; Online continues to grow with recent investments in capacity and capabilities offering opportunities to expand margins. Phoenix was strong during the month following better than expected results. The company released better guidance than expected with more focus on de-leverage which allayed market concerns.

Changes

During the period, we purchased a new holding in Weir Group. This is mining equipment supplier with a well-established installed base which generates significant aftermarket revenue and profit. The outlook for mining capex looks reasonable, especially in their key commodities (copper, gold, iron ore) which should allow OE orders to improve from a low base. Attractive free-cash-flow generation and modest valuation (15x P/E FY1 - significant discount to Epiroc, in-line with Metso) with a robust balance sheet offers a very attractive risk reward if the company is able to deliver on mid-to-high single-digit growth and 20% margin.

Our investment case for Watches of Switzerland has been impacted by several factors including the weaker-than-expected demand recovery in China along with the Rolex acquisition of Bucherer. At this point, we believe there are more questions than answers for the company, therefore, we have decided to exit the position.

Reckitt Benckiser was reduced following the emergence of potential litigation. Unfortunately, this is an overhang that is likely to persist for some time and we moderated position to manage this expected dynamic.

Outlook

Equity markets entered 2024 in a 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, and 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 some emerging markets. 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 by 39% as a group. The FTSE All Share returned by 7.9% in 2023. China was the surprise negative in 2023, with no noticeable COVID re-opening recovery and lacklustre growth despite government attempts to stimulate.

As we pass the first quarter of 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 recently improved 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. We believed that this quantum of cuts will prove to be overly aggressive without a significant deterioration in the economy which we don't expect. That said despite these expectations moderating significantly during Q1, stock markets have continued to make progress in the developed world. 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 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 2023, 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 in previous commentaries, 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: Financial Times, 8 March 2024. https://www.ft.com/content/c0d37d54-846b-45bf-81fb-3c32d89a8cda

2 Source: Financial Times, 1 March 2024. https://www.ft.com/content/25958fcd-14ed-4aa3-8931-5773871fcff8

3Source: Financial Times, 20 March 2024. https://www.ft.com/content/9f31261e-7d10-4963-b652-9b96822822bd

23 April 2024