Last checked at 16 Jan 2020 13:42
BlackRock Income and Growth Investment Trust Plc - Portfolio UpdateBlackRock Income and Growth Investment Trust Plc - Portfolio Update
PR Newswire
London, January 14
| BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) |
| All information is at 31 December 2019 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 | 5.1% | 3.5% | 21.9% | 21.0% | 39.5% | 103.1% |
| Net asset value | 3.7% | 4.4% | 21.6% | 20.4% | 42.6% | 92.4% |
| FTSE All-Share Total Return | 3.3% | 4.2% | 19.2% | 22.0% | 43.8% | 86.1% |
| 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: | 209.48p |
| Net asset value - cum income*: | 215.10p |
| Share price: | 207.00p |
| Total assets (including income): | £53.2m |
| Discount to cum-income NAV: | 3.8% |
| Gearing: | 7.9% |
| Net yield**: | 3.5% |
| Ordinary shares in issue***: | 22,873,100 |
| Gearing range (as a % of net assets) | 0-20% |
| Ongoing charges****: | 1.1% |
| * includes net revenue of 5.62 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 3.5% and includes the 2019 final dividend of 4.60p per share declared on 24 December 2019 and due to be paid to shareholders on 19 March 2020, and the 2019 interim dividend of 2.60p per share declared on 25 June 2019 and paid to shareholders on 27 August 2019. |
| *** excludes 10,060,832 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 2019. |
| Sector Analysis | Total assets (%) |
| Pharmaceuticals & Biotechnology | 9.2 |
| Oil & Gas Producers | 8.8 |
| Banks | 8.7 |
| Financial Services | 8.0 |
| Media | 7.7 |
| Life Insurance | 7.4 |
| Support Services | 7.0 |
| Food Producers | 6.4 |
| Travel & Leisure | 4.9 |
| Household Goods & Home Construction | 4.7 |
| Gas, Water & Multiutilities | 4.4 |
| Tobacco | 4.0 |
| Food & Drug Retailers | 3.6 |
| Mining | 3.1 |
| Health Care Equipment & Services | 2.6 |
| Industrial Engineering | 2.4 |
| Nonlife Insurance | 1.9 |
| Mobile Telecommunications | 1.7 |
| Electronic & Electrical Equipment | 1.2 |
| Construction & Materials | 1.1 |
| General Retailers | 0.6 |
| Beverages | 0.4 |
| Net Current Assets | 0.2 |
| ------ | |
| Total | 100.0 |
| ====== | |
| Ten Largest Equity Investments | |
| Company | Total assets (%) |
| Royal Dutch Shell 'B' | 5.8 |
| AstraZeneca | 5.0 |
| GlaxoSmithKline | 4.3 |
| RELX | 4.1 |
| British American Tobacco | 4.0 |
| National Grid | 3.7 |
| Tesco | 3.6 |
| Unilever | 3.4 |
| BHP | 3.1 |
| BP Group | 3.1 |
| Commenting on the markets, Adam Avigdori and David Goldman representing the Investment Manager noted: |
| December proved to be a month of significant news flow that led to a positive market environment for equities. Signs of easing trade tensions between the US and China earlier in the period were confirmed by an agreement between the US and China on a phase 1 deal; China said that it would postpone planned tariffs on US autos and the US agreed not to proceed with new tariffs and, in some cases, reduce existing ones. In the UK, investors were nervous going into the December General Election, and markets showed signs of relief when Boris Johnson’s Conservative Party secured a convincing majority. Sterling spiked to a three and a half year high against the Euro in the hope that the new-found stability in Parliament would remove the uncertainty around Brexit. This move retraced as the month wore on as concerns re-emerged around the impact of a hard Brexit. UK domestic equities led the market higher with the FTSE 250 and Small Cap indices outperforming the more internationally-exposed FTSE 100. The FTSE All-Share rose over the month to +3.3%, with Consumer Services, Basic Materials and Financials outperforming, whilst Telecommunications underperformed. Over the month, the BlackRock Income and Growth Investment Trust returned 3.7%, outperforming the benchmark, the FTSE All-Share which returned 3.3%. Premier Miton was the largest contributor, performing strongly after the Conservative election majority. Tesco also contributed. The company continues to make good progress towards improving returns despite the competitive nature of the UK food-retailing market. We believe that the launch of ‘Clubcard Plus’ has the potential to enhance customer loyalty and win trade from the discounters. We also think that there could be further uplift in the share price performance as there is potential for corporate activity in 2020 given the company is reviewing offers for its Asian assets which should be accretive for shareholders. Forterra also contributed after shares benefitted from the rally in UK domestic stocks. Unilever detracted from performance. The company warned that its organic growth would be slightly below the lower half of its estimated range. However, we do not believe that the results sufficiently change the debate around the top line and volumes. Oxford Instruments detracted from performance, pulling back after strong share price performance the previous month. John Laing Group also detracted from performance, announcing that the rise in Sterling would have a negative impact on its earnings. Portfolio activity was quiet in the month. We bought a position in Centrica. We sold our holding in Ascential. We added to our holding in HSBC, 3i and National Grid and reduced Oxford Instruments. 2019 proved to be a strong year for equity investors, with the FTSE All-Share returning 19%. The 2020 macro environment marks a big shift from the dynamics of 2019, when an unusual late-cycle dovish pivot by central banks helped offset the negative effect of rising trade tensions. It is unlikely that the same level of accommodative monetary policy will be available, either conventionally or unconventionally in developed markets in 2020. From a valuation perspective, we recognise that for the most part, valuations are higher but not excessive, with trailing p/e of 19x, up from 15x a year ago. On a free cash flow basis, equity markets still look attractive, with the UK the stand-out at 6.3% and around a 30% discount to the MSCI World across a range of valuations. For the UK economy, and the equity market, the picture looks better than it has done for a number of years. For the domestic-facing economy, the Conservative majority has brought more political certainty and indeed, although it is early days, we have seen signs of sentiment and investment returning following the election result. We expect this to continue. We believe the UK’s economic climate has the potential to improve, supported by an expected increase in public sector spending. Entering 2020, the UK will be one of the few, if not the only, large developed economy adopting fiscal stimulus. With the backdrop of ‘full’ employment, the recently announced increase to the national living wage suggests disposable income will continue to improve with underlying growth in nominal and real wages for the first time in recent years. For those who have been following our strategy, we continue to employ a bottom-up approach rather than focusing on a specific macro outcome. We believe in identifying franchises across the UK market which can sustain their competitive advantages over the long term, supporting strong and consistent cash generation. Hence, we will continue to focus the portfolio on stock specific risk where our resources and long-term analysis is best able to deliver capital and income growth over the long-term for shareholders. We are also conscious that Environmental, Social and Governance matters (“ESG”) are increasingly at the forefront of shareholders’ minds. We have always looked to our companies to operate within a healthy ecosystem of all their stakeholders whether these are shareholders, employees, customers, regulators or suppliers. It is our belief that a company’s ‘ecosystem’ is crucial to ensuring the sustainability of long-term returns. |
| 16 January 2020 |