BlackRock Income and Growth Investment Trust Plc - Portfolio Update
October 21 2019 - 9:43AM
PR Newswire (US)
BLACKROCK INCOME AND
GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) |
All information is at
30 September 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 |
3.1% |
3.1% |
5.3% |
17.7% |
38.7% |
96.3% |
Net asset value |
3.2% |
1.9% |
1.5% |
18.3% |
42.8% |
84.2% |
FTSE All-Share Total Return |
3.0% |
1.3% |
2.7% |
21.7% |
38.9% |
78.7% |
|
|
|
|
|
|
|
Source: BlackRock |
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|
|
|
|
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BlackRock took over the investment
management of the Company with effect from
1 April 2012. |
At month end |
|
Sterling: |
|
Net asset value - capital only: |
201.66p |
Net asset value - cum income*: |
205.98p |
Share price: |
200.00p |
Total assets (including
income): |
£51.4m |
Discount to cum-income NAV: |
2.9% |
Gearing: |
5.1% |
Net yield**: |
3.5% |
Ordinary shares in issue***: |
23,017,476 |
Gearing range (as a % of net
assets) |
0-20% |
Ongoing charges****: |
1.1% |
* includes net revenue of 4.32 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 2018 final
dividend of 4.40p per share declared on 20 December 2018 and paid
to shareholders on 19 March 2019 and the 2019 interim
dividend of 2.60p per share declared on 25 June 2019 and
paid to shareholders on 27 August 2019. |
*** excludes 9,916,456 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 2018. |
Sector Analysis |
Total assets
(%) |
Oil & Gas Producers |
9.8 |
Pharmaceuticals &
Biotechnology |
9.2 |
Media |
9.1 |
Life Insurance |
8.1 |
Support Services |
7.1 |
Banks |
6.8 |
Financial Services |
5.6 |
Household Goods & Home
Construction |
5.4 |
Food Producers |
5.1 |
Travel & Leisure |
4.3 |
Tobacco |
3.7 |
Food & Drug Retailers |
3.3 |
Gas, Water & Multiutilities |
3.2 |
Mining |
3.1 |
Health Care Equipment &
Services |
2.9 |
Industrial Engineering |
2.6 |
Mobile Telecommunications |
2.2 |
Nonlife Insurance |
2.0 |
Electronic & Electrical
Equipment |
1.2 |
Construction & Materials |
0.9 |
Chemicals |
0.6 |
General Retailers |
0.5 |
Beverages |
0.3 |
Net current assets |
3.0 |
|
------ |
Total |
100.0 |
|
====== |
|
|
Ten Largest Equity
Investments |
|
Company |
Total assets
(%) |
Royal Dutch Shell 'B' |
6.4 |
AstraZeneca |
4.9 |
GlaxoSmithKline |
4.3 |
RELX |
4.2 |
British American Tobacco |
3.7 |
BP Group |
3.5 |
Tesco |
3.3 |
National Grid |
3.2 |
BHP |
3.1 |
Prudential |
3.1 |
Commenting on the markets, Adam
Avigdori and David Goldman representing the Investment Manager
noted: |
|
The UK equity market traded sideways
over the quarter, disguising a period of weakness in August and a
marked style rotation, out of momentum and into value, at the
beginning of September. Concerns around geopolitical risk, global
trade uncertainty and weakening global economic data did though
create headwinds, with intraday share prices influenced by ongoing
news flow surrounding trade tensions. Market concern spiked in
August, with investors turning to safe-haven assets as global
government yields plunged to historical lows and the US Treasury
curve inverted between the 2 and 10-year yields, resuming fears of
impending recession as it has previously been a lead-indicator.
Market risk was balanced by central banks shifting monetary policy
to a more dovish stance. The US Federal Reserve cut rates by 50
basis points in Q3, aiming to ease inflationary pressures and
offset rising geopolitical tensions. The European Central Bank
introduced a comprehensive easing package, cutting the deposit
facility rate by 10 basis points to -0.5% and restarting asset
purchases at the pace of 20bln EUR per month, with a commitment to
run the programme until its 2% inflation target was met. Emerging
markets detracted the most throughout the third quarter. Chinese
assets took the biggest hit as disruptions in global trade have
begun to be reflected in the economic data. In August, Chinese
industrial production slowed to +4.8% year-on-year, the weakest in
17 years and well below market expectations. In the UK, in June,
newly-elected UK Prime Minister Boris Johnson pledged to leave the
European Union on October 31st with or without a deal.
Ever since, the Brexit debate has become more heated, with the
risks of a disruptive ‘no-deal’ Brexit still looming large. This,
plus the contraction in domestic GDP in the second quarter, led to
additional weakness in Sterling. |
|
Over the quarter, the Company
returned 2.01%, outperforming the benchmark index, the FTSE All
Share, which returned 1.27% in the same period. |
|
The largest contributor was London
Stock Exchange Group, one of the fund’s core holdings, whose shares
rose further this month as the market further appreciated the
synergies and growth potential of the Refinitiv deal. Shares in
pest control specialist Rentokil also contributed this month. After
the positive set of trading results late in July, we met with the
company’s management team and would note that the pest control
division continues to be the key driver with strong structural
drivers in a fragmented industry. Medtech player Smith & Nephew
also contributed as shares rose further after a strong trading
statement released at the end of July where they upgraded revenue
guidance further. Shares were rallying through August as the
investment community further appraised what this entails for the
company. |
|
The largest detractor to the fund
was Prudential whose shares were weak, not only due to further
potential rate cuts from the Fed against the ongoing US-China trade
tensions, but also the social unrest in Hong Kong. Its shares saw a
sharp sell-off prior to reporting H1 2019 results. The results
themselves highlighted that they are embarking on a strategy of
organic and inorganic diversification for their US business into
Fixed Annuities, noting the poorer conditions in the Variable
Annuities market as distribution shifts from broker to advised.
Elsewhere in the group, Asia continues to deliver with no change in
its structural growth story, despite the aforementioned concerns.
Shares in John Laing detracted following a weak H1 2019 update with
sizeable write-downs on their wind assets in Australia and Germany
citing issues of transmission/regulatory and lack of wind
respectively. These write-downs were more than offset by value
enhancements and project completions elsewhere such that NAV still
increased. Bodycote also detracted from performance. As a global
cyclical it is sensitive to market concerns about global growth. We
felt its results were reassuring in light of news flow from sector
peers and where its highest margin areas delivered. In our view,
this is a differentiated and well-capitalised industrial, with a
management team we rate highly. |
|
Over the quarter we initiated a
position in Aviva, WPP and Grafton Group. We added to positions in
Standard Chartered, Taylor Wimpey, Phoenix Group, Smith &
Nephew, St James's Place, National Grid and Fuller Smith and
Turner. We sold our position in Imperial Brands. We have also
trimmed exposure to Lloyds, John Laing, BP, Rentokil, Barclays,
Elementis and MoneySupermarket.com. |
|
We continue to see a period of
sustained growth. Importantly, we expect nominal growth to remain
modest as we see structural pressures from demographics, corporate
underinvestment and new technology continuing to act as a drag on
inflation. The dovish tilt from central banks is clearly supportive
for markets, however from time to time we expect markets to worry
about a shift to a more hawkish stance. With heightened political
uncertainty and investor nervousness, 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 spend whilst at the same time we are watching for
signs of overheating in the US and monitoring economic growth in
China. 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 recent past has 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. |
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