For the six month period ended 30 April 2016, BlackRock Income & Growth’s net asset value per share returned -2.8% and the share price returned -2.3%. By comparison, the FTSE All-Share Index was unchanged over the period. Since the period end and up to 27 June 2016, the Company’s NAV per share has fallen by 6.8% compared with a fall in the benchmark of 4.7% (all percentages with income reinvested). The board has declared an unchanged interim dividend of 2.4p.
The managers’ report says the main driver of the portfolio’s relative performance over the six months to
30 April 2016 was strongly performing shares in the index which they did not hold. The mining sector demonstrated significant volatility, initially falling in the fourth quarter of 2015, to rebound strongly in the first quarter of 2016. As the portfolio is positioned away from companies that rely on a continuing high commodity price environment, this acted as a material drag on relative performance. Carnival saw a higher oil price impact its shares, whilst the company continues to point to improving revenue and a confident earnings outlook. Next also reacted negatively to a reduction in sales forecasts for 2016, driven by a mix of short-term factors and a weaker outlook for the UK consumer. However, they believe that Next is a well-managed business with an exemplary record of capital allocation.
The portfolio’s strongest performer was a position in Shire which recovered strongly following robust results. Earlier this year the shares had been weak on its proposed acquisition of Baxalta and they used that as an opportunity to re-purchase shares in the company. Other strong performers included car
insurance specialist Admiral Group and John Laing Group, the infrastructure developer and investor. Both companies reported a strong set of full year 2015 results and continued dividend growth. Intercontinental Hotels Group also reported robust results with a significant special dividend and a holding in Rentokil Initial reported strong momentum in its business with excellent cash generation.
BRIG : BlackRock Income & Growth misses bounce in mining sector