Three-pronged strategy delivers rising income and growth - annual report summary

February 5, 2018

BlackRock Income & Growth Investment Trust (BRIG) aims for growth in capital and income over the longer term through investment principally in UK equities. Its report for the year to 31 October 2017 shows shareholders’ funds of £52.68 million.

Adam Avigdori has been a co-manager of the trust since April 2012. David Goldman, a senior director of BlackRock’s UK equity team, was appointed his co-manager in July 2017. They invest on a bottom-up basis in their highest-conviction ideas, in the belief that over the long term, earnings and cash   ow growth are the dominant drivers of share prices.

The core of BRIG’s portfolio is in cash-generative companies that can pay a growing yield and where the managers target a double-digit total return. However, about 20 per cent is usually in ‘growth’ companies operating in areas with signi¬ficant barriers to entry and featuring business models that should enable them to grow consistently. Around 10 per cent is invested in out-of-favour companies with high yields and very low valuations, but with signi¬ficant recovery potential.

At the end of October the portfolio comprised 46 holdings. Over 70 per cent by value was in FTSE 100 companies, headed by BAT, Lloyds Banking Group, and RELX Group, and most of the rest was in mid-caps. Gearing is through derivatives or through borrowings, which ended the financial year at 2.9 per cent.

Net asset value total returns per share last year were13.8 per cent, just ahead of the 13.4 per cent returns on BRIG’s benchmark, the FTSE All-Share index. The discount tightened to 2.1 per cent, lifting share price total returns to 14.8 per cent. The total dividend was raised 4.8 per cent to 6.6p, having edged up annually from 5.1p in 2011. Earnings per share fell slightly to 6.63p. Ongoing charges were 1.08 per cent.

The board uses share buybacks to keep the discount tight, and there is a five-yearly continuation vote, with one falling due in March. 

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