|
BlackRock Income and Growth Investment Trust Plc - Portfolio Update
| BLACKROCK INCOME AND GROWTH INVESTMENT TRUST PLC (LEI:5493003YBY59H9EJLJ16) |
| All information is at 31 December 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 |
-4.3% |
-10.7% |
-13.3% |
3.9% |
25.1% |
66.6% |
| Net asset value |
-4.2% |
-12.8% |
-12.1% |
6.6% |
26.6% |
58.2% |
| FTSE All-Share Total Return |
-3.7% |
-10.2% |
-9.5% |
19.5% |
22.1% |
56.2% |
|
|
|
|
|
|
|
| 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: |
177.93p |
| Net asset value - cum income*: |
183.28p |
| Share price: |
176.00p |
| Total assets (including income): |
£48.1m |
| Discount to cum-income NAV: |
4.0% |
| Gearing: |
0.3% |
| Net yield**: |
3.9% |
| Ordinary shares in issue***: |
24,046,223 |
| Gearing range (as a % of net assets) |
0-20% |
| Ongoing charges****: |
1.1% |
| * includes net revenue of 5.35 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 3.9% and includes the 2018 final dividend of 4.40p per share declared on 20 December 2018 to be paid to shareholders on 19 March 2019 and the 2018 interim dividend of 2.50p per share declared on 25 June 2018 and paid to shareholders on 3 September 2018. |
| *** excludes 8,887,709 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 |
10.7 |
| Banks |
8.0 |
| Pharmaceuticals & Biotechnology |
8.0 |
| Food Producers |
6.5 |
| Support Services |
6.4 |
| Media |
6.1 |
| Life Insurance |
5.5 |
| Financial Services |
5.5 |
| Household Goods & Home Construction |
5.0 |
| Tobacco |
3.9 |
| Travel & Leisure |
3.8 |
| Industrial Engineering |
3.7 |
| Food & Drug Retailers |
3.2 |
| Mining |
3.0 |
| Gas, Water & Multiutilities |
2.9 |
| Nonlife Insurance |
2.4 |
| Mobile Telecommunications |
1.8 |
| General Retailers |
1.2 |
| Electronic & Electrical Equipment |
1.1 |
| Forestry & Paper |
0.8 |
| Personal Goods |
0.8 |
| Chemicals |
0.6 |
| Construction & Materials |
0.6 |
| Software & Computer Services |
0.5 |
| Net Current Assets |
8.0 |
|
------ |
| Total |
100.0 |
|
====== |
| Ten Largest Equity Investments |
|
| Company |
Total assets (%) |
| Royal Dutch Shell 'B' |
6.2 |
| RELX |
5.0 |
| Unilever |
4.4 |
| AstraZeneca |
4.0 |
| GlaxoSmithKline |
3.9 |
| John Laing Group |
3.7 |
| Reckitt Benckiser |
3.7 |
| BP Group |
3.6 |
| Lloyds Banking Group |
3.5 |
| Prudential |
3.3 |
| Commenting on the markets, Adam Avigdori and David Goldman representing the Investment Manager noted: |
|
The UK equity market endured a torrid quarter as markets tumbled on concerns around slowing economic growth and delivered the worst annual return since the financial crisis. UK political uncertainty contributed to the declines as the Prime Minister postponed the ‘meaningful vote’ on her Brexit deal and faced a ‘no confidence’ vote from her own party. The quarter started with US long rates rising however weaker economic data and fears of an escalating trade war led to a significant change in markets: the US yield curve flattened and the rhetoric from the Federal Open Market Committee softened. Arguments over the Italian budget deficit and protests in France added to the uncertain environment in Europe. The rapid change in expectations for economic growth over the quarter led to changes in market leadership with few clear trends. Some defensive sectors, such as Pharmaceuticals, Beverages and Utilities, outperformed, but the Tobacco names continued to weaken on fears around disruption in the US profit pool. The Resources sector split: Miners performed well, despite softness in China, but Oil & Gas slid as OPEC failed to arrest the steep decline in the oil price. Financials were also split with Banks outperforming, but the more market-sensitive sectors, such as Life Insurance, underperforming.
Over the quarter the Company delivered a return of -12.8%, underperforming the FTSE All-Share which delivered a return of -10.2%.
Patisserie Holdings was the largest detractor for the period as evidence of fraudulent activity emerged. The company sought an immediate injection of liquidity through a £15.7m fundraising which was supported by a loan from the Chairman. The Trust did not participate in this fundraising given the lack of clarity regarding the financial position and profitability of the business. A subsequent statement from Patisserie Holdings has confirmed that the misstatement of the accounts was extensive, involving very significant manipulation of the balance sheet and profit and loss accounts involving thousands of false entries into the company’s ledgers. Patisserie Holdings has appointed a new executive team and new auditors and the process to restate the company’s accounts is ongoing though the company warns that this will take time. Superdry announced a profit downgrade, which the company says is due to the unseasonably warm weather having a substantial impact on sales volumes. Promotional activity has been higher than the company would like and the consumer environment remains challenging. Superdry plan to change their range to be more flexible and less skewed towards jackets, however this change also entails operational risk. Diageo agreed the sale of 19 of its brands to US firm Sazerac which allows the company to have a greater focus on the faster growing premium brands segment of the market. The sale will lead to a gain on disposal which will add to a share buyback programme previously announced.
John Laing Group, the largest contributor for the quarter, has reiterated continued investment in Australia and North America, where they have a large, varied and exciting pipeline of opportunities, and new investment opportunities in some Latin American countries. We continue to have conviction in this business which is well exposed to global infrastructure investment trends. Rentokil experienced a share price rise over the quarter, boosted more recently by an announcement from the company that they are preparing for a buy-out of their pension fund which is currently in surplus. This will result in a cash payment to the company. United Utilities benefitted from a trading statement that was in line with expectations. The shares trade on a discount to asset value and the general market moves into more defensive names have benefitted the water utility company.
During the quarter we purchased a new position in Whitbread, a high-quality domestic company with less leverage and superior margins than its peers. It is supported by structural growth tailwinds as they roll out budget hotels and continue to take market share. Other new purchases include Vodafone, BHP and Phoenix Group. We have added to holdings including in Reckitt Benckiser, Tesco, Ferguson and Prudential. Through the quarter we have reduced exposure to British American Tobacco, HSBC, Mondi and Elementis and have sold our holdings in CRH and Admiral. We no longer hold Shire, which was taken out of the benchmark following the takeover by Japanese pharmaceutical firm Takeda.
We are broadly constructive on global markets and expect continued global growth, albeit in a less synchronised fashion across the G7 nations and at a lower level than in the recent past. 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 (led by the Federal Reserve) 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, whilst at the same time we are watching for signs of overheating in the US and monitoring the natural slowdown in China. US construction spend remains well below long-term averages and initiatives to boost this spend feature prominently on the political agenda. 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. |
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| 18 January 2019 |
Source: PR Newswire
(January 18, 2019 - 11:23 AM EST)
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