BlackRock Income and Growth Investment Trust Plc - Portfolio Update
17 August 2018 - 11:30PM
PR Newswire (US)
BLACKROCK INCOME AND GROWTH
INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) |
All information is at 31 July
2018 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 |
-0.2% |
5.9% |
4.5% |
22.9% |
50.5% |
94.0% |
Net asset value |
0.9% |
3.9% |
7.9% |
24.5% |
55.5% |
85.0% |
FTSE All-Share Total Return |
1.3% |
3.9% |
9.2% |
30.2% |
44.9% |
77.7% |
|
|
|
|
|
|
|
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: |
211.93p |
Net asset value - cum income*: |
214.34p |
Share price: |
205.00p |
Total assets (including
income): |
£56.0m |
Discount to cum-income NAV: |
4.4% |
Gearing: |
3.3% |
Net yield**: |
3.2% |
Ordinary shares in issue***: |
24,258,268 |
Gearing range (as a % of net
assets) |
0-20% |
Ongoing charges****: |
1.1% |
* includes net revenue of 2.41 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 3.2% and includes the 2017 final
dividend of 4.10p per share declared on 20 December 2017 and paid
to shareholders on 9 March 2018 and the 2018 interim dividend of
2.50p per share declared on 25 June 2018 and payable to
shareholders on 3 September 2018. |
*** excludes 8,675,664 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 2017. |
Sector Analysis |
Total assets
(%) |
Oil & Gas Producers |
10.3 |
Banks |
9.6 |
Pharmaceuticals &
Biotechnology |
8.8 |
Support Services |
6.6 |
Tobacco |
6.4 |
Financial Services |
6.0 |
Food Producers |
5.4 |
Media |
5.0 |
Life Insurance |
4.8 |
Non-life Insurance |
4.2 |
Industrial Engineering |
3.7 |
Construction & Materials |
3.4 |
General Retailers |
3.2 |
Household Goods & Home
Construction |
3.1 |
Food & Drug Retailers |
3.0 |
General Industrials |
2.9 |
Travel & Leisure |
2.4 |
Gas, Water & Multiutilities |
2.1 |
Forestry & Paper |
1.9 |
Chemicals |
1.4 |
Software & Computer
Services |
0.9 |
Electronic & Electrical
Equipment |
0.8 |
Net Current Assets |
4.1 |
|
------ |
Total |
100.0 |
|
====== |
Ten Largest Equity
Investments |
|
Company |
Total assets
(%) |
Royal Dutch Shell 'B' |
5.9 |
British American Tobacco |
5.4 |
RELX |
3.9 |
Unilever |
3.9 |
Lloyds Banking Group |
3.7 |
John Laing Group |
3.5 |
BP Group |
3.5 |
GlaxoSmithKline |
3.3 |
AstraZeneca |
3.3 |
Ferguson |
3.1 |
Commenting on the markets, Adam
Avigdori and David Goldman representing the Investment Manager
noted:
|
The UK equity market
recorded another positive month during July returning 1.3%,
although it underperformed global equities. Politics once again
took centre stage in the UK with changes in Theresa May’s cabinet.
Firstly, Brexit Secretary David Davis resigned over the Chequers
agreement and soon after Foreign Secretary Boris Johnson stepped
down, criticising the Prime Minister’s Brexit strategy. Despite
instability within the party, the Prime Minister was able to win
crucial votes on customs and trade bills, however renewed Brexit
concerns and subdued wage growth data in the UK was enough to weigh
on Sterling during the month. U.S. President Donald Trump and
European Commission president Jean-Claude Juncker vowed to lower or
scrap tariffs related to non-auto industrial goods and work to
reform World Trade Organization rules to address unfair trade
practices. The mining and oil & gas sectors performed poorly as
ongoing concerns around trade wars led to further weakness in
commodity prices. Dollar strength or Sterling weakness, saw a
number of overseas earners perform well, whilst small and mid-caps
underperformed large caps given the higher international exposure
of the FTSE 100.
Over the month the BlackRock Income and Growth Investment Trust
delivered a return of 0.9%, underperforming the FTSE All-Share
which delivered a return of 1.3%.
TP ICAP shares have fallen significantly following a disappointing
statement. The recent market volatility we have been seeing has
failed to come through to revenue growth for TP ICAP as was
expected, but the real issues are on the cost side. The
expectations for cost saving synergies have been revised downwards
and interest and broker compensation costs are increasing. Inchcape
suffered as a slowdown in pre-registration activity put pressure on
new and used car margins in the UK. Strength across parts of Europe
helped to offset declines in the UK, but this wasn’t enough to put
the brakes on the challenging back-drop for new car vehicle
margins. Inchcape’s distribution business remains a high-quality
business with a net cash balance sheet and modest growth
expectations. Rentokil’s results were in line with expectations in
that they delivered a modest slowdown in organic growth due to the
continued impact of last year’s hurricanes on Puerto Rico as well
as the cold weather in March and April delaying the pest season.
M&A continues to contribute to revenue and profit growth.
John Laing, one of the largest contributors for the month,
highlighted an exciting pipeline of investments for the second half
of the year which reinforces our positive view of the business.
With the shares trading at a 10% discount to net asset value, we
believe there is an attractive risk-reward on offer. DS Smith
results demonstrated strong organic growth of 5.2% with further
market share gains. Additionally, margins are improving as the cost
recovery lag starts to work through the financial statements.
British American Tobacco released reassuring results with the US
business beating expectations and delivering improved profit
margins. The business is generating good cash flow and the FX
headwinds are easing.
During the month we purchased a new position in Associated British
Food and Phoenix Group Holdings. Additionally, we have added to
positions in United Utilities, De La Rue, Diversified Oil & Gas
and GlaxoSmithKline. We have reduced exposure to Wier Group,
Rentokil, Next and TP ICAP and have sold our holdings in ITV,
Direct Line and BT Group.
We are broadly constructive on global markets and expect a
continuation of the global growth that we have seen over the last
few years, albeit in a less synchronised fashion across the G7
nations as this year brings more political and economic
uncertainty. The trend of steady growth has provided a solid
backdrop for equity market returns, which have also been helped by
loose financial conditions from supportive governments and central
banks. However, political uncertainty is rising, which combined
with tightening financial conditions, means that we expect
volatility to return to markets. This provides us, as active
managers of a concentrated portfolio, with a great opportunity to
identify high-quality cash generative businesses, with robust
balance sheets, that can weather various market cycles and help to
deliver long term capital and income growth for our clients.
We continue to like cash generative consumer staple companies,
especially those exposed to the emerging market consumer given the
prevalent demographic trends in certain markets. These companies
often generate substantial cash flow which allows them to invest in
innovation, marketing and distribution to ensure the longevity of
their brands while also paying attractive and growing dividends to
shareholders. We have also sought exposure to infrastructure and
construction spend, which remains well below long-term averages and
initiatives to boost this spend features prominently in
politicians’ manifestos, particularly in the US and Europe. We also
note that inflationary pressures are starting to build and
therefore we seek those companies with sufficient pricing power and
efficiency potential to withstand rising costs. As the last
few months have demonstrated, it is crucial to be selective and to
focus on those companies that are strong operators, that provide a
differentiated service or product and that boast a strong balance
sheet. |
17 August 2018 |
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