LONDON (Alliance News) - BlackRock Greater Europe Investment Trust PLC Tuesday said it underperformed the market in its last financial year amid a volatile investing background, despite being marginally ahead of its benchmark at the half year.
Nevertheless, the trust's portfolio managers, Vincent Devlin and Sam Vecht, remain "broadly positive" on European equities, according to the trust's chair.
"Valuations are reasonable relative to other asset classes and to US equities. European earnings expectations for 2014 are also now more realistic and the weakening of the Euro should support revised growth forecasts," Carol Ferguson said in a statement.
Explaining the trust's underperformance, Ferguson said market conditions in the second half proved to be much more challenging.
"A perception of growing political risks in Ukraine and the Middle East combined with the sluggish pace of economic recovery to create a volatile background against which long term investors struggled to hold their nerve as the more short term investors unwound their positions. Meanwhile, lack of clarity about the direction of central bank policy was an added uncertainty in unsettled markets," Ferguson said.
For the twelve months ended August 31, the trust's undiluted net asset value per share returned 4.3%, compared with a return of 10.4% in the FTSE World Europe ex UK Index. The share price returned 2.8% over the same period. All percentages are calculated in sterling terms with income reinvested.
Since the year end, the trust's undiluted NAV per share decreased by 6.4% compared with a fall in the FTSE World Europe ex UK Index of 7.0% over the same period.
In the first six months of its financial year, the trust's undiluted NAV per share returned 11.5%, compared with a return of 11.3% in the FTSE World Europe ex UK Index. The trust's share price returned 10.6% over the same period (all percentages calculated in sterling terms with income reinvested).
Last month the trust said its next semi-annual tender offer will take place on December 1 and will be for up to 20% of its shares in issue at the prevailing fully diluted NAV per share subject to a discount of 2%.
The trust's shares were Tuesday quoted up 1.5% at 215.00 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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BlackRock Greater Europe Investment Trust (BRGE)