Global equity markets had another strong year of gains in 2024, following a trend that started in late 2023. Moderating inflation, stable labour markets and falling interest rates have all supported markets over the past 12 months. In November, the Chinese government announced stimulus measures for its economy. These factors have all contributed to a supportive backdrop for financial markets.
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 UK has been no exception, though investments in UK equities have not seen the giddy gains of those in some areas of global equity markets, notably US mega-cap technology names. Some trepidation around the new government and the impact of its new tax and spending programme on growth appears to have held back confidence. Whilst sizable increases in minimum wage and public sector wage agreements likely support a brighter picture for the UK consumer, business confidence remains low impacting the growth outlook. 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.
The IMF has raised its growth forecast for 2025 from 1.5% to 1.6%, reflecting a “continued pick-up in real incomes and consumption”.1 It also cited expected cuts in interest rates from the Bank of England over the course of the year.
Looking into 2025, the market’s attention is likely to focus on the incoming US administration under Donald Trump. The global economy has benefited from the 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.
While this may unsettle global markets, we believe the political certainty now evident in the UK, will be helpful for UK assets and address the 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 relatively depressed valuations for the UK stock market stand in contrast to high valuations seen elsewhere1. This valuation ‘anomaly’ has prompted many UK companies to undertake buybacks. The UK market also looks attractive from a yield point of view. The FTSE All Share currently has a dividend yield of 3.6%.2 This means the cash return of the UK market is attractive in absolute terms and comfortably higher than many other developed markets.
We anticipate further market volatility in 2025, but believe that in the course of time risk appetite will return and opportunities to invest for growth and income are evident in the UK stock market. It remains a fertile spot for long-term investing. In the BlackRock Income and Growth Investment Trust, we have identified several potential opportunities with new positions initiated in both UK domestic and mid cap 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.
For more information on how to access the opportunities presented by this trust, please visit: www.blackrock.com/uk/brig
1 City AM - IMF upgrades UK growth outlook after sluggish year - 17 January 2025.
2 The London Stock Exchange - FTSE All Share Index yield - 19 January 2025.
Risk Warnings
Investors should refer to the prospectus or offering documentation for the funds full list of 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.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.
Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.
Trust-specific risks
Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.
Gearing Risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
Liquidity Risk: The Fund's investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair.
Important Information
In the UK this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.
This document is marketing material. UK Investment Trust Funds: The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.
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