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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.

Kepler Rating: As at 30 January 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Awards/Ratings have not been superseded to date.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: 31/08/2019

Ongoing Charge (including any Performance Fee): 1.08%

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 October 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 fell by 3.4% and the share price declined by 3.1%. For reference, the FTSE World Europe ex UK Index returned -6.1% during the period.

Europe ex UK markets sold off during the month as surging coronavirus infection rates, as well as the reintroduction of national lockdowns in many European countries weighed on sentiment. While hospitalisation rates rise, we would note that increased hospital capacity and care and a better understanding of the virus have so far led to lower mortality rates than during the first wave. We believe the economic impact of a second lockdown is likely to be more muted this time around.

Many companies are now facing earnings downgrades in Q4 and Q1, but the overall market level is supported by the idea of a vaccine being announced in the near-term, as well as continued recovery in selective end markets going into 2021.

In October, defensive sectors such as telecommunications and utilities held up slightly better, while technology and oil & gas saw the sharpest market falls. The Company outperformed the reference index, driven by strong stock selection while sector allocation was negative.

In sector terms, the Company benefited from being overweight consumer services and industrials. Our higher exposure to technology detracted from returns, although this was more than offset by strong stock selection. While the Company’s higher allocation to healthcare – a sector that often experiences volatility ahead of US elections – detracted, this was also more than offset by accurate stock selection.

Stock selection was strongest within technology, where a new position in Allegro was the top performer over the month. This Polish e-commerce platform selling both international and local brands enjoyed a strong share price performance after only going public in early October. We believe the group’s growth prospects look strong over the medium to long term, as online penetration in the Polish retail market remains relatively low. Within the same sector, Netcompany and ASML were also amongst the strongest contributors.

The industrials sector contributed to relative returns with a holding in Sika being amongst the best performers, beating analyst expectations and raising guidance. The firm has rebounded quickly from considerably negative organic growth in Q2 to being flat in Q3, while also showing strong progression in margins.

French aerospace company Safran also reported strong Q3 numbers towards the end of the month and commentary on improving business trends was taken well by the market. Further, the company’s extensive cost cutting programme is running ahead of expectations. 

Stock selection within healthcare aided returns. Italian DiaSorin performed well given the launch of their COVID-19 antigen test. Additionally, not owning Bayer was beneficial. The company issued a profit warning with the pandemic hitting profits harder than expected, forcing Bayer to write down the value of assets in its agricultural business.

Strong contribution also came from luxury brand Hermes which continued to benefit from the outstanding resilience of the high-end consumer. Within this context, not owning LVMH was negative as the company delivered strong Q3 results.

The Company’s investment in software group SAP was the largest detractor during October. The company published weaker than expected results and cut its revenue and profit forecasts for this year due to depressed business spending as coronavirus cases continue to rise. Importantly, SAP have updated medium term targets, essentially pushing them out by circa two years in part to reflect disruption caused by COVID-19. We had been expecting the management team to update the strategic targets in light of COVID-19, however were left surprised by the extent of the revision to forecasts.

A negative contribution also came from RELX which continues to see a COVID-19 impact on their exhibitions business, as well as concerns around lower journals and subscription numbers from universities.

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 underweight allocation to consumer goods, financials, utilities, basic materials and telecoms.

Outlook

Over recent years, many investors have avoided exposure to European equities owing to concerns around political risk, rising populism and a challenged financial system. We have long been of the view that one needs to take an active approach to investing in European equities. With this in mind, we felt that for active stock pickers Europe as a region can offer shareholders access to some highly attractive companies listed in the region. The response to the fallout from COVID-19 has the potential to change the more negative perception on the asset class as a whole.

The proposed €750 billion EU Recovery Fund is a significant step of solidarity for the bloc and one that can potentially bring greater fiscal coordination. In this context, both the economy and local stock markets appear well positioned to make up lost ground, potentially transforming European equities into a standout opportunity in the developed world, while notably providing further subsidies for growth in Emerging Europe.

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

Information correct as at 18 November 2020.

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 30 years’ experience in the investment management industry. He is a Managing Director of Project Snowball LLP, 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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