Last checked at 14 Oct 2021 16:31
BlackRock Greater Europe Investment Trust Plc - Portfolio UpdateBlackRock Greater Europe Investment Trust Plc - Portfolio Update
PR Newswire
London, October 14
The information contained in this release was correct as at 30 September 2021. Information on the Company’s up to date net asset values can be found on the London Stock Exchange website at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC (LEI - 5493003R8FJ6I76ZUW55)
All information is at 30 September 2021 and unaudited.Performance at month end with net income reinvested
| One Month | Three Months | One Year | Three Years | Launch (20 Sep 04) | |
| Net asset value (undiluted) | -5.4% | 3.6% | 37.0% | 76.5% | 763.2% |
| Net asset value* (diluted) | -5.4% | 3.6% | 37.0% | 76.5% | 763.6% |
| Share price | -4.6% | 4.1% | 47.8% | 92.7% | 797.5% |
| FTSE World Europe ex UK | -3.6% | 0.8% | 22.0% | 30.3% | 356.0% |
* Diluted for treasury shares and subscription shares.Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 639.17p |
| Net asset value (including income): | 641.55p |
| Net asset value (capital only)1: | 639.17p |
| Net asset value (including income)1: | 641.55p |
| Share price: | 660.00p |
| Premium to NAV (including income): | 2.9% |
| Premium to NAV (including income)1: | 2.9% |
| Net gearing: | 8.2% |
| Net yield2: | 0.9% |
| Total assets (including income): | £627.0m |
| Ordinary shares in issue3: | 97,725,411 |
| Ongoing charges4: | 1.0% |
1 Diluted for treasury shares.2 Based on a final dividend of 4.40p per share for the year ended 30 August 2020 and an interim dividend of 1.75p per share for the year ending 31 August 2021.3 Excluding 17,573,527 shares held in treasury.4 Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2020.
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| Top 10 holdings | Country | Fund % |
| ASML | Netherlands | 7.2 |
| Lonza Group | Switzerland | 5.3 |
| Sika | Switzerland | 4.6 |
| Novo Nordisk | Denmark | 4.5 |
| DSV | Denmark | 4.5 |
| RELX | United Kingdom | 4.0 |
| LVMH Moët Hennessy | France | 3.9 |
| Royal Unibrew | Denmark | 3.5 |
| Netcompany Group | Denmark | 3.0 |
| Hexagon | Sweden | 2.9 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV fell by 5.4% and the share price by 4.6%. For reference, the FTSE World Europe ex UK Index returned -3.6% during the period.
Europe ex UK markets were down during the month. Following a quiet August, September was a particularly volatile month as concerns around the Chinese property market, rising bond yields, as well as higher inflation and power prices, spooked investors. Classic value areas including energy and financials outperformed the falling market, while most sectors delivered negative returns.
As we find ourselves in a situation where we see strong industrial and consumer demand combined with issues in supply chains, we more than ever focus on companies with strong pricing power that have the ability to pass on higher prices. Ultimately, we continue to believe that the inflationary pressures we are seeing remain transitory.
The Company underperformed its reference index during the month, with both sector allocation and stock selection being slightly negative. In sector terms, the Company’s higher allocation to technology and lower allocation to financials were the largest detractors from performance. However, our small overweight to energy was positive. Not owning any utilities was the strongest contributor in sector terms. Utilities were hit again over the month as many of these companies have at least some of their sales locked in at lower prices which creates pressure on revenues and margins. On top of that, a number of governments, for example in Spain, are looking to protect consumers by capping energy prices. In this context, not owning Iberdrola was particularly helpful.
On a stock basis the largest detractors were companies impacted by the market rotation, as we witnessed a sell-off in Lonza, Sika, ASML, Allegro, BE Semi and NetCompany. Whilst movement in interest rates can cause short-term volatility, it ultimately has no bearing on the potential earnings power of businesses over any reasonable investment time horizon. Our research effort remains focused on finding and owning Europe’s best wealth creating businesses for the long term. Sell-offs like we saw during September are often an attractive buying opportunity for us.
In a month that was dominated by energy prices, with crude oil and natural gas prices rising significantly, it is no surprise that not owning TotalEnergies was one of the largest detractors, while our holding in Russian Lukoil was the top performer over the month. We typically find the most attractive opportunities in energy in Developing Europe where we can find select ‘value’ opportunities. However, we remain underweight the Developed European oil sector as it has been significantly underinvested in recent years and the transition towards renewable energy is likely to be cost-intensive, dilutive to returns and take a long time. Similarly, our holding in Israeli ICL contributed positively to returns, benefiting from a rise in fertiliser prices on the back of higher gas prices.
A few of our ‘re-opening’ beneficiaries such as travel IT platform Amadeus also contributed positively, as expectations for the resumption of international travel and events picked up, on reports of a travel corridor between the US and the UK.
The Company also benefited from a position in Allfunds, a wealth tech operator acting as an intermediary between fund houses and distributors. Allfunds reported its first results after its April initial public offering (IPO), beating expectations with strong assets under management growth and margins surprising to the upside. The management is delivering on its IPO promises, while continuing to invest in organic and inorganic growth.
At the end of the period, the Company had a higher allocation than the reference index towards technology, consumer discretionary, industrials, health care and energy. The Company had an underweight allocation to financials, utilities, consumer staples, telecoms, real estate and basic materials.
Outlook
We see recent market strength persisting over the coming months, aided by better virus testing capabilities, a successful vaccine rollout and a resilient global consumer, alongside continued accommodative fiscal and monetary policy. This market recovery is unlikely to be equal across all sectors: some companies still lack pricing power and are unable to reinstate dividends; others, however, such as travel exposed stocks, could see a meaningfully brighter 2022. 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 overall.
14 October 2021
ENDS
Latest information is available by typing www.blackrock.com/uk/brge on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager’s website nor the contents of any website accessible from hyperlinks on the Manager’s website (or any other website) is incorporated into, or forms part of, this announcement.