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

 

Performance at month end with net income reinvested

 

                                                           Since
                            One   Three  One   Three Five
                                                           1 April
                            Month Months Year  Years Years
                                                           2012

Sterling

Share price                 2.5%  1.9%   16.1% 21.3% 27.5% 142.8%

Net asset value             0.2%  3.3%   16.8% 24.1% 37.2% 144.9%

FTSE All-Share Total Return 0.5%  2.4%   17.0% 24.4% 37.9% 139.3%

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:       225.23p

Net asset value - cum income*:        229.09p

Share price:                          204.00p

Total assets (including income):      £49.5m

Discount to cum-income NAV:           11.0%

Gearing:                              4.8%

Net yield**:                          3.7%

Ordinary shares in issue***:          19,873,112

Gearing range (as a % of net assets): 0-20%

Ongoing charges****:                  1.28%

* Includes net revenue of 3.86 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                    11.6

Banks                               8.4

Pharmaceuticals & Biotechnology     8.3

Media                               7.6

Real Estate Investment Trusts       6.7

General Retailers                   6.4

Oil & Gas Producers                 6.3

Financial Services                  6.0

Household Goods & Home Construction 5.9

Mining                              4.6

Personal Goods                      3.5

Travel & Leisure                    3.5

Industrial Engineering              3.4

Nonlife Insurance                   3.1

Gas, Water & Multiutilities         3.0

Food Producers                      2.2

Life Insurance                      1.8

Electronic & Electrical Equipment   1.6

Tobacco                             1.4

General Industrials                 1.0

Net Current Assets                  3.7

                                    -----

Total                               100.0

                                    =====

Country Analysis                    Percentage

United Kingdom                      92.8

United States                       1.9

Switzerland                         1.6

Net Current Assets                  3.7

                                    -----

                                    100.0

                                    =====

Top 10 holdings                     Fund %

AstraZeneca                         7.2

RELX                                5.3

Shell                               4.5

3i Group                            3.9

HSBC Holdings                       3.5

Unilever                            3.5

Rio Tinto                           3.5

National Grid                       3.0

London Stock Exchange Group         3.0

Segro                               2.7

 

 

 

Commenting on the markets, representing the Investment Manager noted:

 

Performance Overview:

The Company returned 0.2% during the month net of fees, modestly underperforming the FTSE All-Share which returned 0.5%.

 

 

Market Summary:

Equity market volatility remained a feature during August. Early in the month, markets around the world saw sharp declines in response to a combination of disappointing economic data out of the US and an interest rate hike by the Bank of Japan.

 

In the US, a weak July jobs report, which showed payrolls increase by 114k, the smallest increase in over three years, coupled with a slight increase in unemployment rate to 4.3% 1 , fuelled fears about a US recession. The Bank of Japan's (BoJ) decision to increase its policy rate by 25 basis points 2 led to a sudden reversal of carry trade positions, which had depended on low borrowing costs in Japanese yen to invest in higher-yielding assets.

 

Market sentiment improved during the second half of the month as investors found reassurance in potential interest rate cuts by the Federal Reserve (Fed), especially following comments made by Powell at the economic symposium at Jackson Hole, as well as a robust Q2 earnings season. As a result, most markets were able to recover their losses and end the month in positive territory.

 

In the UK, despite experiencing the widespread volatility at the start of the month, the market ended the month in positive territory. The FTSE All-Share returned 0.5% in August, with Health Care, Consumer Goods and Telecommunications being the best performing sectors, while Basic Materials, Oil & Gas and Technology detracted.

 

During the period, The Bank of England (BoE) cut the base interest rate by 0.25 percentage points to 5% 3 , marking the first reduction since the pandemic. The BoE also upgraded its growth forecast for 2024 to 1.25% 3 . Additionally, the Office for National Statistics reported that the UK economy grew by 0.6% 4 in the second quarter of 2024, all of which contributed to the market rally.

 

Stock comments

Next was a top positive contributor to relative performance during the month after reporting very strong results. Second quarter full-price sales increased by 3.2% compared to last year, surpassing expectations by £42m in contrast to a forecasted 0.3% decline due to last year's exceptional summer. The first half (H1) saw full price sales rise by 4.4%, exceeding guidance of 2.5%. Total Group sales, including markdowns, subsidiaries, and investments, grew by 8.0% in H1. Next increased profit guidance for the full year by £20m to £980m, a 6.7% increase from last year, driven by additional sales (£11m) and cost savings (£9m), primarily in logistics. London Stock Exchange reported solid results with a slight acceleration in topline growth with margin expansion expected to persist.

 

Admiral reported very strong results, once again underscoring the quality of the organisation and its consistent performance. Despite offering a homogeneous product,

we believe Admiral continues to excel in understanding market cycles and delivering consistently superior returns compared to its peers. Achieving 15% year-on-year growth in UK motor policies, as the largest player, while the claims combined ratio continues to decline, is particularly impressive. The insurer's conservative approach to loss ratios and reserve ratios is expected to result in a healthy release of reserves in the future, thereby supporting profitability.

 

Spirax detracted following weak first-half results that prompted downgrades of 5% for 2024 and 10% for 2025. This year's downgrades are primarily driven by STS (Steam) due to weaker than expected industrial production. Additionally, the anticipated recovery in Biopharma and Semiconductor exposure has yet to materialise.

 

Oxford Instruments detracted from relative performance due to a combination of the broad cyclical sell-off in early August and, more specifically, being caught up in renewed geopolitical tension within semiconductor markets related to China. Segro was also affected by the recessionary and tech fears of early August, causing the shares to fall modestly during the month.

 

Changes

During the period we sold Intermediate Capital as the shares have performed very strongly since purchase.

 

 

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 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. China was the surprise negative in 2023, with no noticeable COVID re-opening recovery and lacklustre growth despite government attempts to stimulate.

 

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. Despite expectations for rate cuts moderating significantly, 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.

 

With the UK's election 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 jn 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.

 

1 Source: Financial Times   2 August 2024 https://www.ft.com/content/fcdf997f-5704-4ebb-8b77-a2e85a994e7e

2 Source: Financial Times, 31 July 2024. https://www.ft.com/content/599790b6-abf1-4ca5-a1d9-40ccb352c9e2

3 Source: Financial Times, 1 August 2024. https://www.ft.com/content/6c0d1fe5-ee7e-412e-a72d-49c1ba05d883

4 Financial Times15 August 2024. https://www.ft.com/content/21bede0b-b982-4e04-a5d9-bee926411e02

 

25 September 2024