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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

Annual Expenses as at date: 31/10/2023

Ongoing Charge: 1.28%

Management Fee Summary: Management fee is 0.6% p.a. of the Company's market capitalisation. There is no additional fee for Company Secretarial and administration services.

  • ISIN: GB0030961691

    Sedol: 3096169

    Bloomberg: BRIG LN

    Reuters: BRIG

    LSE code: BRIG.L

  • Name of Company: BlackRock Fund Managers Limited

    Telephone: 020 7743 3000

    Email: cosec@blackrock.com

    Website: www.blackrock.com/uk

    Correspondence Address: Investor Services,

    BlackRock Investment Management (UK) Limited

    12 Throgmorton Avenue

    London

    EC2N 2DL

    Name of Registrar: Computershare PLC

    Registered Office: 12 Throgmorton Avenue

    London

    EC2N 2DL

    Registrar Telephone: +44 (0)370 703 0076

    Place of Registration: England

    Registered Number: 4223927

  • Year End: October

    Results Announced: December (annual), June (interim)

    AGM: March

    Dividends Paid: March (final), September (interim)

Latest company announcements

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.

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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.

The Board’s approach to ESG

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.

Environmental, social and governance (ESG) issues can present both opportunities and risks to long-term investment performance. These ethical and sustainability issues are a key focus of the Board, and your Board is committed to a diligent oversight of the activities of the Manager in these areas. The Board believes effective engagement with management is, in most cases, the most effective way of driving meaningful positive change in the behaviour of investee company management. The Board believes that BlackRock is well placed as Manager to fulfil these requirements due to the integration of ESG into its investment processes, the emphasis it places on sustainability, its collaborative approach in its investment stewardship activities and its position in the industry as one of the largest suppliers of sustainable investment products in the global market.

Sustainable investing: BlackRock’s approach

Sustainability is BlackRock’s standard for investing, based on the investment conviction that integrating sustainability can help investors build more resilient portfolios and achieve better long-term, risk-adjusted returns. BlackRock believes that climate change is a defining factor in companies’ long-term prospects and that it will have a significant and lasting impact on economic growth and prosperity. BlackRock believes that climate risk equates to investment risk and this will drive a profound reassessment of risk and asset values as investors seek to react to the impact of climate policy changes. This in turn is likely to drive a significant reallocation of capital away from traditional carbon intensive industries over the next decade.

Environmental, Social and Governance: integration into BlackRock’s investment management process

Environmental, Social and Governance (ESG) investing is often conflated or used interchangeably with the term “sustainable investing.” BlackRock has identified sustainable investing as being the overall framework and ESG as a data toolkit for identifying and informing our solutions. BlackRock has defined ESG Integration as the practice of incorporating material ESG information and consideration of sustainability risks into investment decisions in order to enhance risk-adjusted returns. BlackRock recognises the relevance of material ESG information across all asset classes and styles of portfolio management. ESG information and sustainability risks are included as a consideration in investment research, portfolio construction, portfolio review, and investment stewardship processes. The Investment Manager considers ESG insights and data, including sustainability risks, within the total set of information in its research process and makes a determination as to the materiality of such information in its investment process. ESG insights are not the sole consideration when making investment decisions and the extent to which ESG insights are considered during investment decision making will also be determined by the characteristics or objectives of the Company. The Investment Manager’s evaluation of ESG data may be subjective and could change over time in light of emerging sustainability risks or changing market conditions. This approach is consistent with the Investment Manager’s regulatory duty to manage the Company in accordance with its investment objective and policy and in the best interests of the Company’s investors. The Investment Manager’s Risk and Quantitative Analysis group will review portfolios to ensure that sustainability risks are considered regularly alongside traditional financial risks, that investment decisions are taken in light of relevant sustainability risks and that decisions exposing portfolios to sustainability risks are deliberate, and the risks diversified and scaled according to the investment objectives of the Company.

BlackRock’s approach to ESG integration is to broaden the total amount of information the Investment Manager considers with the aim of improving investment analysis and understanding the likely impact of sustainability risks on the Company’s investments. The Investment Manager assesses a variety of economic and financial indicators, which may include ESG data and insights, to make investment decisions appropriate for the Company objectives. This can include relevant third-party insights or data, internal research or engagement commentary and input from BlackRock Investment Stewardship.

ESG integration does not change the Company’s investment objective or constrain the Investment Manager’s investable universe and does not mean that an ESG investment strategy or exclusionary screens has been or will be adopted by the Company. Similarly, ESG integration does not determine the extent to which the Company may be impacted by sustainability risks.

Investment stewardship

BlackRock undertakes investment stewardship engagements and proxy voting with the goal of protecting and enhancing the long-term value of clients’ investments for relevant asset classes. In our experience, sustainable financial performance and value creation are enhanced by sound governance practices, including risk management oversight, board accountability, and compliance with regulations. We focus on board composition, effectiveness and accountability as a top priority. In our experience, high standards of corporate governance are the foundations of board leadership and oversight. We engage to better understand how boards assess their effectiveness and performance, as well as their position on director responsibilities and commitments, turnover and succession planning, crisis management and diversity. For further detail regarding BlackRock’s work on investment stewardship please refer to the website here.

Engagement with portfolio companies in 2020

The Board receive periodic updates from the Manager in respect of activity undertaken for the year under review. Over the year to 31 October 2020, 94 total company engagements were held with the management teams of 36 portfolio companies, representing 75% of the portfolio at 31 October 2020. To put this into context, there were 48 companies in BlackRock Income and Growth Investment Trust plc’s portfolio at 31 October 2020 (31 October 2019: 48). In total 1,018 proposals were voted on at 59 shareholder meetings.

Fund manager commentary

31 January 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 portfolio returned -2.5% during the month net of fees, underperforming the FTSE All-Share which returned -1.3%.

Market Summary:

Despite mixed macroeconomic data, global equity markets rallied in January on strong earnings from technology names. The UK equity market lagged and fell on concerns around growth in China, notably, in the commercial real estate market, and a stronger-than-expected inflation reading. The FTSE All Share fell by -1.32% with Basic Materials as the top underperforming sector.

U.S. jobs report showed a tight labour market with a greater-than-expected 216,000 jobs created and strong wage growth in December1. Core US inflation, which excludes food and energy costs, fell slightly to 3.9% in December from 4% in November2. After slowing wage growth, the European Central Bank left rates on hold as widely expected.

Late in the month, strong earnings from chipmakers TSMC and ASML triggered a global equity market rally. While the S&P 500 hit all-time highs during the month, risk assets came under pressure on the last trading date of the month with the S&P 500 down by the most since September, as Fed Chair Powell explicitly stated that a March rate cut was unlikely.

Investors scaled back their expectations of rate cuts from the Bank of England after a surprise increase in UK inflation in December. Consumer prices rose at a rate of 4%, up from 3.8% in November, the first increase in 10 months3. Services inflation, rose to 6.4% in December from 6.3%in November and core inflation was 5.1% in December, unchanged from the previous month3. The FTSE 100 index tumbled on the announcement.

The release of the consumer confidence index in the UK indicated a rise of three points month-on-month to minus 19; the third consecutive month-on-month increase and a two-year high. Notably, consumer expectations of personal finance for the next 12 months were positive for the first time in two years. January’s purchasing manager index reading indicated economic activity rising at the fastest pace in seven months4. In addition, wage growth in the UK slowed to 6.5 % in the three months to November, down from a peak of 8.5% in the summer.5

Contributors to performance:

The top detractor was Watches of Switzerland. The company issued a profit warning in the month which showed a big deceleration in sales in lower/mid-tier watches and jewellery in the UK. In mid-December, the mix of product changed away from watches with precious metals to “steel-only” models. Given gold watches can sell at c.3x the price of steel, the impact on the average-sale-price for the group was significant and was the primary cause of the downgrade.

Rio Tinto and BHP also detracted from performance during the period due to pressure on Chinese commercial real estate given the miners supply steel that goes into the construction industry.

Hays, the staffing company, issued a profit warning following a deceleration in activity in December with net fees falling c.15% in December vs 7-8% in September-November due to weakness in their permanent placements division alongside a muted seasonal pick-up in temporary placements. Hays is now guiding to 1H24 EBITA of £60m vs consensus of £73m and leading to 15-25% cuts for FY24 as this run-rate is then used for FY24. The company has indicated it is accelerating its cost savings program. The shares have been derating for some time in anticipation of this downturn. Hays remains cash generative and operates with a net cash balance sheet which should allow it to emerge in a strong competitive position when the macroeconomic backdrop improves. We continue to own Hays as we see significant long-term value.

US-listed payment-technology corporation, Mastercard, was a top contributor to the relative performance of the portfolio during the month. Shares rallied leading up to the company’s earnings day. On the last day of the month, the payments giant delivered strong earnings and revenue growth for the full year 2023, driven by robust consumer spending, with cross-border volume growth of 24%. RELX shares also rose as the analytics company, which is incorporating AI tools into its products and services, benefitted from the broader rally in technology names.

Changes

During the period, we started a new position in SGS. This is a global testing business with a new and well-regarded CEO. We would expect the new CEO to reinvigorate the organic and inorganic prospects of the organisation which has struggled to organically grow earnings-per-share. We view this as an attractive industry and company which have both struggled with the new CEO as a potential catalyst for a turnaround. The purchase of SGS was funded from the sale of Schneider Electric.

Schneider Electric has been a hugely successful holding for the portfolio since purchase. With the shares up 35% in 2023 and with recent expectations raised again, we felt the risk-reward was now more balanced with better opportunity in SGS from here.

We also purchased a new position in GSK funded from our sale of Roche. Following a significant de-rating, in part due to an overhang on litigation around Zantac, the risk-reward at GSK is far more attractively balanced. Combined with early signs of better R&D productivity, we see a chance for both higher earnings and higher multiples. Against this, and with our discipline of competition for capital, we have sold our position in Roche to fund this. We also sold Woodside Energy given more attractive opportunities elsewhere.

Outlook

Equity markets entered 2024 in a buoyant mood following a strong and broad rally in the latter part of 2023. The outlook, and optimism, is a far cry from 12 months ago, when supply chains were hugely disrupted, and inflation was double digit and well ahead of central banks’ targets prompting rapid and substantial interest rates hikes despite an uncertain demand environment. Despite this, equities had one of their best years on record outperforming bonds with double digit increases, in dollar terms, across most of the developed world and some emerging markets. In the US, the Nasdaq was the standout rising 54% driven by the largest seven companies that rebounded strongly (+c.70%) after a poor 2022, when they had fallen 39% as a group. The FTSE All Share returned 7.9% in 2023. China was the surprise negative in 2023, with no noticeable COVID re-opening recovery and lacklustre growth despite government attempts to stimulate.

As we enter 2024, markets have shifted to ‘goldilocks’ territory whereby slowing inflation has signalled the peak for interest rates while broad macroeconomic indicators that have been weak are not expected to deteriorate further. This is also helpful for the cost and availability of credit which has been recently improving having deteriorated through most of 2023. During December, bond markets had begun to price in 130bps of easing in the US and a not dissimilar amount in the UK and Europe. Whilst not unrealistic, we believe that this quantum of cuts may prove overly aggressive without a significant deterioration in the economy. Notably, the BoE remains staunchly hawkish as their recent meetings showed. Labour markets remain resilient for now with low levels of unemployment while real wage growth is supportive of consumer demand albeit presenting a challenge to corporate profit margins.

Notably in 2024, geopolitics will play a more significant role in asset markets. This year will see the biggest election year in history with more than 60 countries representing over half of the world’s population, c.4 billion people, going to the polls. While most, such as the UK’s are unlikely to have globally significant economic or geopolitical ramifications, others, such as the Taiwanese elections on the 13th January or the US elections in November, could have a material impact. We believe political certainty may 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 particular election outcome, we are mindful of the potential volatility and the opportunities that may result.

As we have commented several times before, 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 the buyback yield of the UK, at the end of 2023, standing at a respectable c.2.5%. Combining this with a dividend yield of c.4%, 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 as earnings estimates moderate, we know that in the course of time risk appetite will return and opportunities are emerging. As we have stated in previous commentaries, we have identified a number of 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 with 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 identifying the companies that strengthen their long-term prospects as well as attractive turnarounds situations.

1Source: Financial Times, 6 January 2024. https://ft.pressreader.com/v99e/20240106/281492166149598 
2 Source: Financial Times, 12 January 2024. https://ft.pressreader.com/v99c/20240112/281805698774386 
3Source: Financial Times, 17 January 2024 https://www.ft.com/content/42c4bece-abd9-4e02-a403-66f1a29647b4 
4Source: Financial Times, 26 January 2024. https://www.ft.com/content/54d6eb7a-e026-4737-9165-49367f84370f 
5 Source: Financial Times, 16 January 2024 https://www.ft.com/content/26ec00a1-9cd9-47d0-bfd9-bff68914abb7

Unless otherwise stated all data is sourced from BlackRock as at 31 December 2023.

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.

Adam Avigdori profile photo
Adam Avigdori
Portfolio Manager
David Goldman profile photo
David Goldman
Portfolio Manager

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 25 years’ experience in 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.

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Investment strategies targeting growth and income
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Over 29 years of proven experience running investment trusts (Dec 2021)
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Unparalleled research capabilities and experienced stock pickers
Contact
To get in touch contact us on:
Telephone: 020 7743 3000
Email: cosec@blackrock.com