BlackRock Income and Growth Investment Trust plc

About this investment trust

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The Company aims to provide growth in capital and income over the long term through investment in a diversified portfolio of principally UK listed equities.

Why choose it?

With longer lifespans and greater demands on retirement funds, investors need a steady source of income and growth. This conviction-led portfolio delivers exposure to a balanced range of sectors and company shares, focused on the UK, which have the potential to deliver capital growth and a growing dividend income.

Suited to…

Investors targeting a steady income that grows over time, useful for retirement planning. The Trust also aims to grow investors’ capital in the longer term.

What are the risks?

• Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
• Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.
• The Trust’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Trust may not be able to realise the investment at the latest market price or at a price considered fair.
• Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Useful information

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Fees & Charges

Sign up for Regulatory News Service alerts

To receive email alert notifications once an update to the Trust occurs, please sign up and select the updates you would like to receive via The Association of Investment Companies website here. Please be aware by clicking on this link you are leaving BlackRock and entering a third party’s website. As such, BlackRock is not liable for its content.

ESG Integration

The fund noted above does not commit to sustainable criteria nor does it have a sustainable investment objective.

BlackRock considers many investment risks in our processes. In order to seek the best risk-adjusted returns for our clients, we manage material risks and opportunities that could impact portfolios, including financially material Environmental, Social and/or Governance (ESG) data or information, where available. See our Firm Wide ESG Integration Statement for more information on this approach and fund documentation for how these material risks are considered within this product, where applicable.

Fund manager commentary

30 November 2024

Please note that the commentary below includes historic information in respect of index performance data and the Company’s NAV performance.

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results.

Performance Overview

The Company returned +2.2% during the month net of fees, performing in-line with the FTSE All-Share Index which returned +2.5%.¹

Market Summary

Led by the US, equity markets rose in November following the results of the US Presidential Election. The S&P500 Index rose by 5.7%, logging the best month of 2024 so far as the post-election optimism lifted markets broadly.

In the UK, the Bank of England reduced interest rates by 25bps, lowering the benchmark rate from 5% to 4.75%, a move widely anticipated by markets. Meanwhile, the UK's Consumer Prices Index revealed inflation rose by 2.3% in the 12-months to October, driven by a surge in gas and electricity prices as the energy cap went up on 1 October.

The FTSE All-Share returned +2.5% in November, whilst the FTSE100 returned +2.6%. The top-performing sectors during this period were technology, telecommunications, and financials. Shares in health care companies slid on the announcement of Donald Trump's choice of vaccine sceptic, Robert F Kennedy Jr, as US Health Secretary concerned investors.

Stock Comments

3i was amongst the strongest positive contributors to the fund during the month as continued positive trading from its largest asset, Action, buoyed investor expectations. The strong like-for-like growth and space rollout continues to offer a highly attractive return despite the significant rise in the shares over the past 3 years.

Modest contributions were seen from Pearson and Spirax; both of which rose during the month as investors reassessed their expectations upwards going into 2025. Mastercard benefited from the rising optimism seen in the US market following the election. Not owning Glencore and Diageo also modestly contributed as both underperformed.

In terms of detractors, Ashmore fell during the month post the US election as investors feared that US exceptionalism and a stronger dollar would weigh on emerging market flows. Similarly, SGS, the Swiss testing business, was weaker as concerns that potential tariffs would reduce exports and therefore, revenues.

Big Yellow Group disappointed investors during the month with a slightly weaker half where disruption caused by concerns around the budget led to weaker than expected demand. Although trading has stabilised since, business confidence ahead of the budget was impacted and decisions were delayed. Sage, which the portfolio does not own, performed very strongly following a larger than expected buyback and good trading. As a result of not owning it, this detracted from performance.

Changes

We added to positions in Lloyds and Travis Perkins during the month. Lloyds has been weak given the concerns on motor finance redress. We believe the strong capital position at Lloyds allows it flexibility to deal with these issues and continue to generate excess free cash flow. We modestly increased the Travis Perkins position following a good meeting with the new management team. There is unlikely to be a significant turnaround in the near-term, however, we believe there is an attractive medium-term opportunity for profitability and cashflow to be rebuilt.

We funded these purchases by reducing the Taylor Wimpey position; managing our exposure to UK domestic and interest rate sensitives. We also modestly reduced the Hammerson position for similar reasons as we see greater upside elsewhere.

Outlook

Global developed equity markets have continued their broad rallies throughout 2024 following a trend that started in late 2023. Following a lengthy period of uncertainty through the COVID-19 era, with sharply rising interest rates and inflation, equity markets have now settled down. Having passed peak interest rates, and with stable labour markets and broadly stable macroeconomic conditions, equity markets have moved to goldilocks territory. The promise of greater fiscal spending in the US, China and parts of Europe have served to buoy equity markets further, although have contributed to rising government bond yields as the spectre of fiscal deficits and inflationary pressures loom large for bond investors.

More recently, following a period of extended economic weakness, the Chinese Government begun a more concerted accommodative campaign aimed at accelerating economic growth and arresting deflationary pressures. Recent policy moves have sought to improve and encourage lending into the real economy with a sizable fiscal easing programme announced. Whilst the scale of the easing is large, western markets and commentators have remained sceptical of its impact and effectiveness whilst awaiting evidence to the contrary. In the UK, the recent budget promised and delivered a large-scale borrowing and spending plan whilst sizable increases in minimum wage and public sector wage agreements likely support a brighter picture for the UK consumer. UK labour markets remain resilient for now with low levels of unemployment while real wage growth is supportive of consumer demand albeit presents a challenge to corporate profit margins.

With the UK’s election and budget now over, the market’s attention will focus on the subsequent policy actions of the new US administration under Donald Trump. The global economy has benefited from significant growth and deflation ‘dividend’ it has received from globalisation over the past decades. The impact of a more protectionist US approach and the potential implementation of tariffs may challenge this dividend. We would anticipate asset markets to be wary of these policies until there is more clarity as we move through 2025. Conversely, we believe political certainty, now evident in the UK, will 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 election or geopolitical outcome, we are mindful of the potential volatility and the opportunities that may result, some of which have started to emerge.

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 a robust buyback yield of the UK market. Combining this with a dividend yield of 3.7% (FTSE All Share Index yield as at 31 October 2024; source: The Investment Association), 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, we believe that in the course of time risk appetite will return and opportunities are emerging. We have identified several potential 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 that we believe offer 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 seeking to identify the companies that strengthen their long-term prospects as well as attractive turnaround situations.

¹Datastream and London Stock Exchange as at 30 November 2024.

Any opinions or forecasts represent an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results.

This information should not be relied upon by the reader as research, investment advice or a recommendation.

Risk: Reference to the names of each company in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.

Portfolio manager biographies

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Adam Avigdori, Director, is co-manager of the BlackRock Income and Growth Investment Trust plc, and is a member of the UK Equity Team. Adam joined BlackRock in 2001 and is responsible for managing UK equity portfolios covering the real estate and construction sectors. Adam has a degree in management sciences.

David Goldman, CFA, Director, is co-manager of the BlackRock Income and Growth Investment Trust plc, and is a member of the UK Equity Team. David joined BlackRock in 2004 and is responsible for managing UK equity portfolios covering the support services sectors. David has a degree with first class honours in economics.

Board of directors

Graeme Proudfoot (Chairman) (appointed 1 November 2019) spent his executive career at Invesco, latterly as Managing Director, EMEA and CEO of Invesco Pensions. Mr Proudfoot joined Invesco in 1992 as a legal advisor and held various roles within the Invesco Group, before moving to take responsibility for a number of businesses in the UK, including Invesco’s investment trust business which he led from 1999 until his retirement from Invesco in 2019. Mr Proudfoot began his career at Wilde Sapte, Solicitors, practising as a corporate finance lawyer in London and New York.

Nicholas Gold (appointed 17 December 2008) is an experienced investment banker with over 36 years’ advisory experience across a wide range of industries and jurisdictions. He retired as the Managing Director responsible for closed-end fund corporate finance at ING Bank N.V. in 2008. Mr Gold is a chartered accountant and a solicitor. He was formerly a member of the Royal Academy of Dramatic Art Council and chairman of its commercial arm, RADA Enterprises. He is a Special Adviser to Pottinger Co Pty Limited.

Charles Worsley (appointed 19 April 2010) has over 30 years’ experience in commercial and residential property management and has been a shareholder of the Company since its launch. Mr Worsley has formerly been a director of retail and media companies. He is currently a director of a commercial property company, a renewable energy development company and a trustee director of a private family office.

Chrysoula Zervoudakis (appointed 19 December 2024) has worked for 28 years in asset management in the UK and France, investing in UK and Continental European Equities for retail and institutional clients. Most recently she was a director at AXA IM until 2015 and co-Head of Research and has managed Growth and Income funds and analysed both industrial and consumer sectors with a focus on corporate governance and sustainability. She has been involved in promoting funds in the UK and internationally. She currently serves as non-executive director of OFI Invest AM in France where she chairs the Engagement and Ethics Committee and as Governor of West Thames College. She was previously a non exec director of Quadpack Industries SA and chair of the audit and risk committee.