Blackrock Greater Europe Investment Trust plc (LON:BRGE) has announced its latest portfolio update.
All information is at 31 July 2021 and unaudited.
To discover more about the BlackRock Greater Europe Investment Trust click here.
Performance at month end with net income reinvested
| One Month | Three Months | One Year | Three Years | Launch (20 Sep 04) | |
| Net asset value (undiluted) | 5.3% | 13.3% | 49.7% | 81.4% | 776.9% |
| Net asset value* (diluted) | 5.3% | 13.3% | 50.0% | 81.3% | 777.3% |
| Share price | 4.7% | 12.5% | 53.9% | 95.8% | 803.0% |
| FTSE World Europe ex UK | 1.6% | 5.3% | 26.6% | 28.9% | 359.9% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 649.74p |
| Net asset value (including income): | 651.74p |
| Net asset value (capital only)1: | 649.74p |
| Net asset value (including income)1: | 651.74p |
| Share price: | 664.00p |
| Premium to NAV (including income): | 1.9% |
| Premium to NAV (including income)1: | 1.9% |
| Net gearing: | 2.9% |
| Net yield2: | 0.9% |
| Total assets (including income): | £609.7m |
| Ordinary shares in issue3: | 93,550,411 |
| Ongoing charges4: | 1.0% |
1 Diluted for treasury shares.
2 Based on a final dividend of 4.40p per share for the year ended 31 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.
| Sector Analysis | Total Assets (%) | Country Analysis | Total Assets (%) |
| Technology | 24.6 | Switzerland | 20.2 |
| Industrials | 24.3 | Denmark | 18.5 |
| Consumer Discretionary | 17.3 | Netherlands | 16.9 |
| Health Care | 16.4 | France | 13.8 |
| Financials | 5.7 | Sweden | 6.4 |
| Consumer Staples | 4.1 | Italy | 4.8 |
| Basic Materials | 4 | Russia | 4.2 |
| Energy | 4 | United Kingdom | 3.1 |
| Net Current Liabilities | -0.4 | Spain | 2.4 |
| —– | Finland | 2.3 | |
| 100 | Poland | 2 | |
| ===== | Ireland | 1.8 | |
| Germany | 1.7 | ||
| Israel | 1.3 | ||
| Greece | 1 | ||
| Net Current Liabilities | -0.4 | ||
| —– | |||
| 100 | |||
| ===== |
| Top 10 holdings | Country | Fund% |
| ASML | Netherlands | 7.6 |
| Kering | France | 6.2 |
| Lonza Group | Switzerland | 5.7 |
| Sika | Switzerland | 5.4 |
| DSV | Denmark | 4.8 |
| Novo Nordisk | Denmark | 4.5 |
| Royal Unibrew | Denmark | 4.1 |
| Dassault Systèmes | France | 3.5 |
| Netcompany Group | Denmark | 3.4 |
| Hexagon | Sweden | 3.3 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV rose by 5.3% and the share price by 4.7%. For reference, the FTSE World Europe ex UK Index returned 1.6% during the period.
Europe ex UK markets continued to rise during July, supported by an overall healthy economic environment. So far, we have seen the start of another strong earnings season in Europe with many companies beating expectations. Importantly, most of our companies are delivering strong results versus 2019 levels, as well as versus 2020.
Technology, basic materials and health care led the market, while more value and ‘recovery’ driven assets including energy, travel and bank stocks lagged the market.
The Company outperformed its reference index, driven by strong stock selection, while sector allocation was also positive. In sector terms, the Company’s higher allocation to technology and industrials aided returns, as did a lower allocation to consumer goods. A higher allocation to consumer services and an underweight to basic materials detracted during the month.
Stock selection was strongest within the health care sector. While the sector benefited from macro moves such as US bond yields coming down, we also saw evidence of high-quality upgrades to earnings. Lonza, the world’s leading biologics manufacturer, was the top performer, reporting stellar numbers, heading towards what we believe could be 16-17% revenue growth this year. Elsewhere, the business is finally demonstrating a healthy degree of operational leverage, posting a 33% EBITDA margin. They continue to invest back into the business to drive growth, a move we wholeheartedly agree with.
Dental implant manufacturer Straumann also continued to trade strongly. Shares were helped by encouraging results releases of some US competitors and our own channel checks would suggest earnings expectations overall remain too low for this year.
ASML was amongst the top performers over the month as the semiconductor supplier once again impressed with strong results. ASML upgraded sales growth guidance for this year, benefiting from the global chip shortage and many of its clients increasing production capacity. Given this strength in demand, the order backlog now provides good visibility on sales growth in future years.
Similarly, VAT Group pre-released strong headline figures with record orders of EUR 253m and margins well ahead of consensus, supported by high demand for semi-conductor components across its broad end market spectrum.
Stock selection was also successful within industrials. Our off-benchmark position in RELX Group contributed positively after releasing better than expected numbers for the first half of the year despite losses from its exhibition business. Elsewhere within industrials, Kingspan also aided returns.
On the negative side, Logitech underperformed off the back of a sequential decline in sales. However, we are confident that this quarter-on-quarter slowdown in demand for video conferencing equipment was driven by clearing of inventories at the wholesale level, which is a trend we expect to reverse positively in future quarters.
A few recovery names including Amadeus and Safran were also amongst the bottom performers as overall air traffic remains fairly weak and the prospect of a more sustained recovery in air travel has seen further delays.
At the end of the period, the Company had a higher allocation than the reference index towards technology, industrials, consumer discretionary, health care and energy.
The Company had an underweight allocation to financials, consumer staples, utilities, 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.
To discover more about the BlackRock Greater Europe Investment Trust click here.
