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
Month
|
Three
Months
|
One
Year
|
Three
Years
|
Five
Years
|
Since
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 - capital only:
|
210.57p
|
Net
asset value - cum income*:
|
216.02p
|
Share
price:
|
187.00p
|
Total
assets (including income):
|
£48.3m
|
Discount to
cum-income NAV:
|
13.4%
|
Gearing:
|
5.9%
|
Net
yield**:
|
4.0%
|
Ordinary shares
in issue***:
|
20,521,536
|
Gearing range (as
a % of net assets):
|
0-20%
|
Ongoing
charges****:
|
1.28%
|
* 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