BlackRock Income Portfolio Update
20 September 2022 - 8:59PM
UK Regulatory
TIDMBRIG
The information contained in this release was correct as at 31 August 2022.
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 2022 and unaudited.
Performance at month end with net income reinvested
One Three One Three Five Since
Month Months Year Years Years 1 April
2012
Sterling
Share price -1.0% 9.9% 6.6% 12.1% 17.5% 113.5%
Net asset value -1.6% -3.4% 0.2% 10.9% 15.4% 97.8%
FTSE All-Share Total Return -1.7% -3.6% 1.0% 12.0% 17.8% 94.4%
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: 194.95p
Net asset value - cum income*: 198.39p
Share price: 194.00p
Total assets (including income): £46.0m
Discount to cum-income NAV: 2.2%
Gearing: 1.3%
Net yield**: 3.7%
Ordinary shares in issue***: 21,171,914
Gearing range (as a % of net assets): 0-20%
Ongoing charges****: 1.2%
* Includes net revenue of 3.44 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 2021
final dividend of 4.60p per share declared on 13 January 2022 and paid to
shareholders on 17 March 2022, and the 2022 interim dividend of 2.60p per share
declared on 22 June 2022 with pay date 1 September 2022.
*** excludes 10,081,532 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
2021.
Sector Analysis Total assets (%)
Support Services 11.7
Oil & Gas Producers 9.0
Pharmaceuticals & Biotechnology 8.6
Media 7.7
Household Goods & Home Construction 7.3
Banks 5.9
Life Insurance 5.6
Mining 5.1
Financial Services 4.6
Tobacco 4.1
Nonlife Insurance 3.4
Personal Goods 2.6
Health Care Equipment & Services 2.5
Travel & Leisure 2.3
Electronic & Electrical Equipment 2.3
Food Producers 2.3
General Retailers 1.7
Fixed Line Telecommunications 1.4
Gas, Water & Multiutilities 1.4
Industrial Engineering 1.1
Software & Computer Services 1.0
Real Estate Investment Trusts 0.6
Electricity 0.3
Net Current Assets 7.5
-----
Total 100.0
=====
Country Analysis Percentage
United Kingdom 85.7
United States 4.5
France 2.3
Net Current Assets 7.5
-----
100.0
=====
Fund %
Top 10 holdings
AstraZeneca 7.5
Shell 7.2
RELX 5.1
Reckitt Benckiser 4.9
British American Tobacco 4.0
Rio Tinto 3.8
Phoenix Group 3.5
Standard Chartered 3.0
3i Group 2.9
Rentokil Initial 2.8
Commenting on the markets, representing the Investment Manager noted:
Performance Overview:
The Company returned -1.6% during the month, modestly outperforming the FTSE
All-Share which returned -1.7%.
Global equity markets fell in August as the global economy and policymakers
faced a sharper inflation-growth trade-off. Equity markets initially moved
higher in the first half of the month as they priced in a slowing Fed hiking
cycle on a softer-than-expected US CPI inflation then fell later when both the
Fed and ECB made it clear that there is more tightening to come.
In the US, headline CPI including food and energy is still running at a near
four-decade high of 8.5%1 with continued concern that inflation is becoming
embedded in expectations and thus more persistent. Meanwhile in Europe, markets
fell as another looming interruption to Russian gas supplies hit the region;
raising the prospects of recession and energy rationing.
The Bank of England hiked rates 50bps to 1.75%2, its largest hike in almost
three decades. UK inflation hit double-digit figures for the first time in four
decades, mainly driven by a combination of supply shocks pushing up core
inflation. This prompted the market to price in a more urgent pace of Bank of
England rate hikes.
China reported disappointing economic data and reduced consumer confidence due
to uncertainty around renewed lockdowns as part of its zero-Covid policy. The
People's Bank of China cut the medium-term lending rate for one-year loans, by
10bps to 2.75%3 in an effort to spur economic growth.
The FTSE All Share Index returned -1.70% for August. The worst performing
sectors included Health Care, Utilities and Industrials, conversely, Technology
and Oil & Gas sectors had the strongest performance.
Stocks:
RS Group was a top positive contributor to relative performance of the Company
during August. The company's share price had been supported by good results in
July and later the announcement of a small acquisition in early August. Pearson
posted a very strong set of interim results and announced a new £100m cost
efficiency programme leading analysts to upgrade medium term forecasts by
10-20%. We feel the management turnaround is beginning to show real traction
with emphasis shifting away from the legacy textbook business to the stable
growth, highly cash generative core where we see material value. In the next 12
months we anticipate several new digital product launches which we expect to be
accretive to growth. The share price of Standard Chartered rose after the
company reported strong results at the end of July. The company also benefitted
from rising interest rates and contributed positively to returns of the Company
during August.
Sanofi was a top detractor from relative performance during the month due to
the recent concerns on litigation around the recalled drug Zantac. Zantac is a
product that Sanofi had owned and disturbed for two years. It is yet unclear
whose legal liability this is going to fall through as there were a number of
pharmaceutical companies which have been distributing this product. This is
likely to takes years to resolve and the share price has been weak on the
initial news. RELX was another top detractor from relative performance during
August. Shares sold off in response to a policy memo from the White House
Office of Science and Technology seeking to make federally funded research
papers publicly available with no embargo. While this policy move represents
risk of c.1.5% of RELX's revenue and profits, we expect the outcome to be more
benign given the value institutions see in the publishing and peer review
process. Taylor Wimpey also detracted from relative performance. The
housebuilding sector underperformed along with other consumer facing cyclicals
on consumer income pressure and in response to rising mortgage rates. While
house prices have thus far remained robust, build cost inflation remains a
headwind.
Portfolio Activity:
During August, we sold the portfolio holding in Sanofi given our concerns
around the aforementioned litigation. We reduced Drax and added to Ashmore.
Outlook:
The headwinds facing global equity markets have grown steadily over the first
half of 2022. Inflation has surprised in its depth and breadth driven by
ongoing COVID related disruption, the war in Ukraine, rising labour costs and
the persistence of these factors. Central banks and governments are tightening
monetary and fiscal policy as interest rates rise and stimulus is withdrawn.
The subsequent rise in the risk-free or discount rate has many consequences,
not least the pressure on valuation frameworks. We are mindful of this and feel
it is incredibly important to focus on companies with strong, competitive
positions, at attractive valuations that can deliver in this environment.
The political and economic impact of the war in Ukraine has been significant in
uniting Europe and its allies, whilst exacerbating the demand/supply imbalance
in the oil and soft commodity markets likely pushing inflation higher for
longer. We are conscious of the impact on the cost of energy, and we continue
to expect divergent regional monetary approaches with the US being somewhat
more insulated from the impact of the conflict, than for example, Europe.
Complicating this further, is the continued impact COVID is having on certain
parts of the world, notably China, which has used lockdowns to control the
spread of the virus impacting economic activity during the first half. We also
see the potential for longer-term inflationary pressure from decarbonisation
and deglobalisation. It is difficult to have a high degree of confidence in how
these evolve but we believe there is rising risk of a policy mistake as central
banks attempt to curb inflation; too late to tighten and/or tightening too
hard. We expect this, and the geopolitical ramifications of the Ukraine war, to
be the prevailing debate of 2022 and beyond.
Although demand remains strong at present, the outlook for corporate revenue
and earnings growth is likely to worsen over the course of 2022 as the pressure
on real incomes raises the spectre once again of stagflation. A notable feature
of our conversations with a wide range of corporates in 2021 was the ease with
which they were able to pass on cost increases and protect or even expand
margins. We believe that when the transitory inflationary pressures start to
fade (e.g. commodity prices, supply chain disruption) then pricing
conversations will become more challenging. We are also increasingly focused on
wage inflation which may be more persistent and yet, in our experience, harder
to pass on. Corporates have already pointed to wages picking up, the
introduction of bonuses and growing pressure on employee retention rates as
competition for labour intensifies. We therefore believe that employee
retention will be an important differentiator in 2022 given the productivity
benefits of a stable workforce as labour market tighten further.
The FTSE 100, with a majority of international weighted revenues, high
commodity weighting and low starting valuation, has proven to be a port in the
storm, as one of the best performing developed markets during the first half.
The FTSE 250, with its higher domestic focus and lower liquidity has suffered
given the weakness in the domestic economy. We would expect the FTSE 100 to
continue to be advantaged until we see a stabilisation in the domestic economy
and subsequent strengthening of sterling or, more likely, a weakening of the
dollar. Whilst we anticipate further volatility ahead as earnings estimates
moderate, we know that in the course of time, risk appetites will return. We
are currently spending time identifying our 'wish list' of opportunities
utilising our flexible approach, experience and strong absolute valuation
framework.
As a reminder, we continue to concentrate the portfolio on businesses with
pricing power and durable, competitive advantages as we see these as best
placed to protect margins and returns over the medium and long-term. Further,
we continue to have conviction in cash generative companies with exceptional
management teams and underappreciated growth potential. At present, whilst we
are excited by the attractive stock-specific opportunities on offer, we
continue to approach the year with balance in the portfolio.
1Financial Times - US inflation eased slightly in July on lower petrol prices
2Financial Times - Bank of England raises rates sharply and warns of 13%
inflation by end of year
3Financial Times - China cuts lending rate as economic data disappoint and
Covid cases rise
20 September 2022
END
(END) Dow Jones Newswires
September 20, 2022 06:59 ET (10:59 GMT)
Blackrock Income And Gro... (LSE:BRIG)
Historical Stock Chart
From Apr 2024 to May 2024
Blackrock Income And Gro... (LSE:BRIG)
Historical Stock Chart
From May 2023 to May 2024