Blackrock Greater Europe Investment Trust plc (LON:BRGE) has announced its latest portfolio update.
All information is at 31 May 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) | 3.4% | 14.9% | 47.4% | 73.3% | 700.1% |
| Net asset value* (diluted) | 3.4% | 14.9% | 47.4% | 73.2% | 700.5% |
| Share price | 3.0% | 15.9% | 55.9% | 89.5% | 726.8% |
| FTSE World Europe ex UK | 1.8% | 11.1% | 26.6% | 31.3% | 344.6% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 592.80p |
| Net asset value (including income): | 594.68p |
| Net asset value (capital only)1: | 592.80p |
| Net asset value (including income)1: | 594.68p |
| Share price: | 608.00p |
| Premium to NAV (including income): | 2.2% |
| Premium to NAV (including income)1: | 2.2% |
| Net gearing: | 5.6% |
| Net yield2: | 1.0% |
| Total assets (including income): | £529.2m |
| Ordinary shares in issue3: | 88,988,101 |
| 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 21,340,837 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 | 25.4 | Switzerland | 19.7 |
| Industrials | 25.1 | Denmark | 18.6 |
| Consumer Discretionary | 17.6 | Netherlands | 16.5 |
| Health Care | 15 | France | 14.3 |
| Financials | 4.5 | Sweden | 6 |
| Consumer Staples | 4.3 | Italy | 4.8 |
| Basic Materials | 4.1 | Russia | 4.5 |
| Energy | 3.7 | Germany | 3.6 |
| Net Current Assets | 0.3 | United Kingdom | 3 |
| —– | Poland | 2.1 | |
| 100 | Finland | 2 | |
| ===== | Ireland | 1.7 | |
| Spain | 1.6 | ||
| Israel | 1.3 | ||
| Net Current Assets | 0.3 | ||
| —– | |||
| 100 | |||
| ===== |
| Top 10 holdings | Country | Fund% |
| ASML | Netherlands | 7.5 |
| Kering | France | 6.0 |
| Sika | Switzerland | 5.4 |
| DSV | Denmark | 5.2 |
| Lonza Group | Switzerland | 5.2 |
| Hexagon | Sweden | 5.0 |
| Royal Unibrew | Denmark | 4.3 |
| Novo Nordisk | Denmark | 4.2 |
| Netcompany Group | Denmark | 3.5 |
| Safran | France | 3.3 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV rose by 3.4% and the share price by 3.0%. For reference, the FTSE World Europe ex UK Index returned 1.8% during the period.
Europe ex UK markets continued to rise in May. The market was led by the consumer sectors and financials, while utilities and technology lagged the market. There was limited stock specific news flow during the month following the conclusion of a very positive Q1 earnings season for many of our companies. Instead, markets were largely dominated by the jump in April’s inflation print that saw core inflation (all items less food and energy) up 0.9% month-on-month. In our view this is temporary, and we believe that numerous supply-side pressures will begin to subside as demand begins to normalise.
The Company outperformed its reference index, driven by strong stock selection. In sector terms, the Company’s lower allocation to utilities and basic materials aided returns, as did a higher allocation to consumer services. However, the Company’s lower exposure to financials and consumer goods was negative for performance. The overweight to technology detracted but was significantly offset by strong stock selection, as positions in Logitech and Netcompany performed strongly.
The Company’s positioning within the luxury sector was positive for returns, as positions in Kering and Hermes continued to perform after having reported strong results in previous months. Elsewhere within the consumer space, high quality names such as Adidas were also amongst the best performers.
Similarly, DSV continued to perform following strong Q1 results and M&A news flow in April. Shares in chemicals distributor IMCD also continued to rise after having posted solid Q1 figures with a 12% beat versus expectations coming from operating EBITA at the end of the previous month.
The Company also benefited from our positioning in the health care sector. Diagnostics firm Chemometec contributed positively, raising guidance for both revenue and EBITDA off the back of strong sales and order intake. Swiss dental implant company Straumann and Danish diabetes specialist Novo Nordisk were also amongst the top performers during the month.
Negative contribution came from the financials sector. Whilst our position in Bank Pekao was positive for returns, the overall underweight exposure detracted. The banks sector performed well as banks are typically seen as a beneficiary of inflation, due to expectations of higher future interest rates. As mentioned above we do not share that view and are generally more concerned about the long-term outlook of banks given the immense competition many European banks face.
Two of our Russian stocks were also amongst the largest detractors. Despite posting strong Q1 results, shares in e-commerce company Ozon declined due to profit taking and overall weakness in the technology space. Retail chain Fix Price came under pressure from higher container shipping costs.
At the end of the period, the Company had a higher allocation than the reference index towards technology, industrials, consumer discretionary, health care and was neutral 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 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 overall.
To discover more about the BlackRock Greater Europe Investment Trust click here.
