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BlackRock Income and Growth reports H1 results with shares up 10.5%

BlackRock Income and Growth reports H1 results with shares up 10.5%BlackRock Income and Growth (BRIG) reported half-year results covering the period to 30 April 2019 with NAV total returns up 7.3% and the shares up 10.5% over the period. BRIG’s position in John Laing Group, the global infrastructure investor, performed particularly well, re-iterating investment into Australia and North America while also taking on new opportunities in Latin America.

With respect to underperformers, Superdry announced a profit downgrade, blaming the unseasonably warm weather at the start of the winter season which had a substantial impact on sales volumes. The investment has also been impacted by the strategic disagreement between the board and the group’s co-founder and largest shareholder. The lack of holdings in Diageo and Rio Tinto detracted from relative performance as well.

Outlook from managers Adam Avigdori and David Goldman

“We expect UK growth to remain modest as we see structural pressures from demographics, corporate underinvestment and new technology continuing to act as a drag on inflation while the dovish tilt from central banks has been supportive for markets. This is a fragile equilibrium such that we expect markets to oscillate between periodic concern about a deterioration in growth and a shift to a more hawkish stance from central banks. With heightened political uncertainty and investor nervousness, we expect market volatility to continue. As active managers of a concentrated fund, we believe that this market environment continues to provide us with the opportunity to find high quality, cash generative businesses, with robust balance sheets, that can deliver long term capital and income growth for our clients.

We continue to like cash generative consumer staple companies, especially those exposed to the emerging market consumer, given the prevalent demographic trends in certain markets. These companies often generate substantial cash flow which allows them to invest in research and development, marketing and distribution to ensure the longevity of their brands while also paying attractive and growing dividends to shareholders. We have also sought exposure to infrastructure spend whilst at the same time we are watching for signs of overheating in the US and monitoring economic growth in China. We also note that inflationary pressures could start to build and therefore we seek those companies with sufficient pricing power and efficiency potential to withstand rising costs. As the recent past has demonstrated, it is crucial to be selective and to focus on those companies that are strong operators that provide a differentiated service or product and that boast a robust balance sheet.”

Top ten positions at 30 April 2019

1.) Royal Dutch Shell ‘B’: 7.0% (2018: 6.8%)

2.) RELX: 4.8% (2018: 4.9%)

3.) Prudential: 4.5% (2018: 3.4%)

4.) Tesco: 4.5% (2018: 3.1%)

5.) Reckitt Benckiser: 4.3% (2018: 2.5%)

6.) GlaxoSmithKline: 4.2% (2018: 4.0%)

7.) British American Tobacco: 4.1% (2018: 5.5%)

8.) BP Group: 4.0% (2018: 4.1%)

9.) AstraZeneca: 3.9% (2018: 3.9%)

10.) Lloyds Banking Group: 3.6% (2018: 3.9%)

BRIG: BlackRock Income and Growth reports H1 results with shares up 10.5%

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