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About this investment trust

The Company aims to provide capital growth, primarily through investment in a focused portfolio constructed from a combination of the securities of large, mid and small capitalisation European companies, together with some investment in the developing markets of Europe.

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.

Why choose it?

Europe is a rich source of innovation and dynamic capitalism. Active management can uncover its most exciting companies. The Trust invests in global brand leaders, plus smaller companies focused on niche, high growth areas, alongside companies in emerging European markets. The Trust looks for high quality, well-capitalised companies with strong management teams that can create real value for shareholders over time. 

Suited to…

This Trust is designed for investors looking to invest in a selection of Europe’s highest quality, fastest-growing companies, irrespective of their size and geography. They must be willing to take on some additional risk to grow their capital over the long term.

GrowthBasic  IWICOTYA20-Winner_Europe

Kepler Rating: As at 30 January 2020.
Investment Week: As at 19 December 2020.
Awards/Ratings have not been superseded to date.

Past performance is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy.

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.
  • Overseas investment will be affected by movements in currency exchange rates.
  • Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation.
  • Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
  • 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.

Useful information

Fees & Charges

Annual Expenses as at Date: 31/08/2020

Ongoing Charge (including any Performance Fee): 1.01%

Management Fee Summary: BlackRock receives an annual management fee of 0.85% of the Company's net asset value.

  • ISIN: GB00B01RDH75

    Sedol: B01RDH7

    Bloomberg: BRGE LN

    Reuters: BRGE.L

    LSE code: BRGE

  • 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)370 707 1163

    Place of Registration: England

    Registered Number: 5142459

  • Year End: 31 August

    Results Announced: April (half yearly), October (final)

    AGM: November/December

    Dividends Paid: May (interim), December (annual)

Fund manager commentary

31 December 2020

Please note that the commentary below includes historic information in respect of performance data in respect of portfolio investments, 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.

During the month, the Company’s NAV rose by 4.5% and the share price by 6.4%. For reference, the FTSE World Europe ex UK Index returned 2.3% during the period.

Europe ex UK markets continued to rise during December, although at more muted levels than we saw in November following the vaccine news. Although vaccination programmes have started across Europe, many countries have tightened lockdown rules as cases continue to rise and a new variant, coming from the UK, started to spread. Cyclical assets including technology, oil & gas, consumer goods and basic materials outperformed defensive sectors such as telecommunications and healthcare.

A Brexit deal was finally announced towards the end of the month, which is clearly positive for market sentiment but not necessarily a game changer for this Company, given our limited exposure to the UK. Macro data remains fairly strong and markets are optimistic going into the new year: this combined with weaker comparative bases over the next few quarters can lead to some solid upgrades in 2021.

Overall, the Company outperformed the reference index during the month of December, finishing off an overall strong performance year. In sector terms, the Company benefitted from its higher allocation to technology, as well as its lower exposure to telecommunications and financials. A lower allocation to consumer goods and a higher exposure to healthcare detracted from returns.

Positive contribution came from strong stock selection within financials. In particular, our position in Russian Sberbank was the top contributor rising in the risk on environment. This stock was held for is fundamental attractions including the potential for earnings upgrades, its cheap valuation and a high dividend yield. Following its rally in December, the stock hit our price target and we exited the position. A position in Greek Alpha Bank also contributed positively.

The Company’s positioning within technology also aided returns. In particular, semiconductor exposed names including ASML and BE Semiconductor were amongst the top performers. The outlook for the semiconductor industry remains positive due to demand strength in the various different end markets they serve. Within the automotive end market especially, several clients have noted shortages in semiconductor components, confirming a real tightness in the market.

Within healthcare, Chemometec was amongst the top contributors in December, with the company’s cell-counting technology supported by clinical data presented at the recent American Society of Haematology conference. The stock continued to move up in anticipation of further positive trading news.

Royal Unibrew was another strong performer over the month, having released Q3 results towards the end of November which were better than expected. This release highlighted share gains made across most regions and categories, as well as the disciplined cost control exercised by management, which has been helpful in COVID-19 times. Meanwhile, it has been very beneficial that their main markets (Finland, Denmark, the Baltics) were generally less affected by COVID-19 restrictions.

This month’s largest detractor was a position in Kingspan. Shares fell as one of Kingspan’s insulation products was found to have been used on Grenfell tower, which tragically burned down in London in June 2017. Kingspan’s product accounted for around 5% of insulation material on the tower, however Kingspan had no involvement in the construction, nor did they recommend use of its product for the tower. While we believe we may now have seen the worst of the bad news priced into shares with little impact thus far on Kingspan operations, we are reviewing our position carefully. Elsewhere, on the negative side, Safran, which had rebounded strongly in November, took a breather and experienced weaker performance as the ongoing lockdowns continue to affect air travel into early 2021.

At the end of the period, the Company had a higher allocation than the reference index towards technology, consumer services, industrials and health care. The Company had a neutral weighting towards oil & gas and an underweight allocation to consumer goods, financials, utilities, basic materials and telecoms.

Outlook

In a tumultuous year, European equity markets ended 2020 with relative strength. We see this strength persisting into 2021 aided by better virus testing capabilities, a successful vaccine rollout and a resilient global consumer, alongside continued accommodative policy. Recovery will not be equal across all sectors: some still lack pricing power and are unable to reinstate dividends; others, however, such as travel exposed stocks, could see a meaningfully brighter 2021. Inflation may be on the horizon, but rates will likely remain low. A period of prolonged negative real rates and higher nominal growth is needed to allow governments globally to work their way out of the post-pandemic debt overhang. We see this as being a supportive backdrop for equities.

Unless otherwise stated all data is sourced from BlackRock as at 31 December 2020.

Information correct as at 18 January 2021.

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 biography

Stefan Gries is co-manager of BlackRock Greater Europe Investment Trust plc. He is a member of the European Equity team within the Fundamental Equity division of BlackRock’s Active Equity Group. He is co-manager on the European Absolute return (long/short) portfolios as well as on Pan European and Europe ex UK long-only portfolios. Prior to joining BlackRock in 2008, he spent two years at Scottish Widows Investment Partnership. Since joining BlackRock, he has worked both as a portfolio manager and as an analyst covering, at various times, energy, pharmaceuticals and insurance on behalf of the European Equity team. He earned an MA in economics and Spanish.

Sam Vecht co-manager of BlackRock Greater Europe Investment Trust plc. He is Head of the Emerging Europe, Frontiers and LatAm team within the Fundamental Active Equity division of BlackRock's Active Equities Group and is responsible for managing long-only and long/short portfolios in both Emerging and Frontier markets. He is also co-manager of the BlackRock Frontiers Investment Trust plc and BlackRock Latin American Investment Trust plc. Sam joined BlackRock in 2000 in the Global Emerging Markets Team. He has a degree in international relations and history.

Olivia Markham profile photo
Stefan Gries
Portfolio Manager
Evy Hambro profile photo
Sam Vecht
Portfolio Manager

Board of directors

All the Directors are non-executive and independent of the Investment Manager. The Board as a whole constitutes the Audit and Management Engagement Committee.

Eric Sanderson (appointed April 2013) (Chairman) is a chartered accountant and a banker and was Chief Executive of British Linen Bank from 1989 to 1997 and a member of the management board of Bank of Scotland in his role as Head of Group Treasury Operations from 1997 to 1999. He was formerly Chairman of MyTravel Group PLC, MWB Group Holdings and Dunedin Fund Managers Limited. He is presently Chairman of Schroder UK Mid Cap Fund plc.

Peter Baxter (appointed April 2015) (Chairman of the Audit and Management Engagement Committee) has over 30 years’ experience in the investment management industry. He is an Executive Director of Snowball Impact Management Ltd, a social impact investment organisation, a Non-Executive director of Civitas Social Housing plc, and a Trustee of Trust for London, and was a member of the Financial Reporting Council’s Conduct Committee. Previously he was Chief Executive of Old Mutual Asset Managers (UK) Ltd and worked for Schroders and Hill Samuel in a variety of investment roles.

Davina Curling (appointed December 2011) has over 25 years’ experience of investment management and was Managing Director and Head of Pan European Equities at Russell Investments. Prior to this she was Head of European Equities at F&C, ISIS, Royal & SunAlliance and Nikko Capital Management (UK). She is also a Non-Executive Director of Invesco Income Growth Trust plc and Henderson Opportunities Trust plc and a member of the St James’s Place Wealth Management Investment Committee.

Paola Subacchi (appointed July 2017) is an economist, writer and commentator on the functioning and governance of the international financial and monetary system. She is Professor of International Economics and Chair of the Advisory Board, Global Policy Institute, Queen Mary University of London, Visiting Professor at the University of Bologna, Non-Executive Director of Scottish Mortgage Investment Trust PLC as well as Founder of Essential Economics Ltd. She writes regularly on Project Syndicate.

Investment strategies targeting growth and income
Investment strategies targeting growth and income
Over 25 years of proven experience running investment trusts
Over 27 years of proven experience running investment trusts. (December 2019)
Unparalleled research capabilities
Unparalleled research capabilities and experienced stock pickers
Contact
To get in touch contact us on:
Telephone: 020 7743 3000
Email: cosec@blackrock.com

MKTGH0520E-1179415-5/5

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