BlackRock Income and Growth Investment Trust Plc - Portfolio Update

The information contained in this release was correct as at 30 April 2025. 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 30 April 2025 and unaudited.

 

Performance at month end with net income reinvested

 

 

BlackRock took over the investment management of the Company with effect from 1 April 2012.

 

At month end

Sterling:

 

Commenting on the markets, representing the Investment Manager noted:

 

Market Summary:

 

April began with one of the most tumultuous periods in history for financial markets, as U.S. President Donald Trump announced his reciprocal tariff strategy on "Liberation Day" on April 2nd. In the 7 days following, the S&P 500 posted its worst day since the pandemic turmoil of March 2020, as well as its best day since the GFC in 2008. Moreover, the 10yr Treasury yield posted its biggest weekly jump since 2001, and the 10yr Treasury-bund spread saw its biggest weekly widening in data going back to German reunification in 1990. Equity market performance on the day was universally negative, with the S&P500 returning -c.4.8%, Europe's STOXX600 -c.2.7% and MSCI World -c.3.7%, although the UK stood out as a relative outperformer, with the FTSE All-Share down 'only' -c.1.5% given the UK is only subject to the 10% blanket tariff. The 30yr Treasury yield posted its biggest daily spike since March 2020, flagging broader concerns about the safety of U.S. assets and their capacity to act as a haven in times of market stress.

 

President Trump announced a 90-day pause on reciprocal tariffs for non-retaliating countries a week later. The news saw a relief rally in global markets, with the sell-off for long-end Treasuries also stabilising in the U.S., and the 30yr yield came down -2.8bps. The S&P 500 jumped +10% on the announcement, before selling off c.3% on the following day as an increased focus on the US-China escalation saw renewed market pressure. The US dollar and Treasuries also subsequently sold off as banks and investors warned that Donald Trump's tariffs could tip the US into recession even as the president stepped back from the initial tariff implementation. The dollar slid against major trading partner currencies to a more than 20-month low as the rush out of US assets sent the yen, euro and pound sterling surging. The yield on the benchmark 10-year US Treasury hit 4.46%, up from 4.17% at the close on April 1, the day before Trump's "liberation day". Whilst equities sold off, gold prices jumped to an all-time high as investors fled into haven assets.

 

The S&P 500, the Stoxx 600 and the FTSE 100 all saw gains in the final week, as US Treasury Secretary Bessent said progress was being made towards trade deals, and the White House confirmed reports that imported autos would not face additional steel and aluminium tariffs.

 

In the UK, February GDP growth surprised to the upside as the economy expanded by 0.5%, despite growth forecasts for this year being cut to 0.8% because of trade disruption and uncertainty caused by U.S. trade tariffs. Positively, the UK mortgage market saw a notable expansion in low-deposit products, with the increased availability reflecting lender confidence and improving market liquidity, though borrowing costs remain elevated. The FTSE All-Share remained relatively flat for the month despite initial volatility around "liberation day", returning -0.25%.

 

Stock comment:

 

WH Smith was the top detractor for the month reflecting growing concerns regarding US passenger numbers and as the market adjusts to the dilutive impact of the sale of its UK High Street division. A strategically sensible transaction though at a disappointing valuation. A reduction in the number of net store openings also disappointed. We still believe that this is an advantaged retailer with attractive, long-term growth potential driven by additional space and improving like-for-like trends that is trading at a relatively low valuation and have added on the weakness.

 

An underweight position in National Grid was the top detractor for the quarter as a market rotation into defensive shares following the `Liberation Day' tariff announcements saw the shares up c.7% for the month.

 

Standard Chartered shares sold off significantly following `Liberation Day'. The bank sector was impacted by heightened macroeconomic and geopolitical concerns with Standard Chartered and HSBC deemed more vulnerable given their greater exposure to high tariff economies.

 

3i Group shares rebounded strongly following recent weakness, and the broad-based `Liberation Day' selloff. Although there was limited company specific news during the month, the group's largest investment, Action, the European value retailer, might be one of the beneficiaries of US tariffs if goods need to be redirected from the US to EU markets.

 

Admiral Group continued to perform well following a strong trading announcement early in March, and data released in April showed that motor pricing had remained flat for the month; a material improvement in month-on-month trends. Motor pricing has been a strong driver of the narrative for Admiral year-to-date and therefore supported continued strong performance through the month. The shares also rebounded heavily following the `Liberation Day' selloff, alongside the broader market.

 

An underweight position in Shell was the third largest contributor for the month.  Shell struggled in the month due to slumping commodity prices, a weak outlook for oil markets and the uncertainties stoked by the US Administration's trade tariffs. The tariff announcements early in the month caused a slump in global energy prices due to fears that an economic slowdown would follow.

 

Changes:

 

During the month, we sold our position in Travis Perkins. This follows the recent and unfortunate departure of the CEO to illness and our concern that the volatile economic backdrop would make a challenging turnaround situation even more difficult. We want to focus the portfolio on ideas where we have higher conviction given the more volatile environment. We added to Taylor Wimpey and Intermediate Capital.

 

Outlook:

 

Having passed peak interest rates with stable labour markets and broadly stable macroeconomic conditions, equity markets have performed strongly through 2024. 2025 has started with a change of market leadership, with European and UK equity markets outperforming the US. The promise of greater fiscal spending in China and parts of Europe have served to buoy equity markets at a time when the US risk appetite appears to be retrenching with concerns on both on trade, tariffs and fiscal consolidation. The persistency of this change in market leadership will largely depend on whether `predictability' returns to US policy, the volatility of which is causing corporates to continually reassess their strategies towards the world's largest economy.

 

Following a period of extended economic weakness, the Chinese Government has begun a more concerted 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, 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.

 

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 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'. Indeed, we anticipate more uncertainty given the announcements of significant federal budget cuts and a stricter immigration policy. 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 portfolio 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 very 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 who continue to use their excess cashflows to fund buybacks contributing to a robust buyback yield of the UK market. Combining this with a dividend yield of 3.8% (FTSE All Share Index yield as at 31 March 2025; source: Bloomberg), the cash return of the UK market is attractive in absolute terms and higher than other developed markets. Although we anticipate further volatility ahead, we believe that 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.

 

16 May 2025