Blackrock Greater Europe Investment Trust plc (LON:BRGE) has announced its latest portfolio update.
All information is at 30 June 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) | 4.1% | 15.6% | 43.7% | 79.2% | 733.2% |
| Net asset value* (diluted) | 4.1% | 15.6% | 43.7% | 79.1% | 733.5% |
| Share price | 4.3% | 18.6% | 52.2% | 90.7% | 762.2% |
| FTSE World Europe ex UK | 1.8% | 8.3% | 22.8% | 33.3% | 352.6% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 617.33p |
| Net asset value (including income): | 619.22p |
| Net asset value (capital only)1: | 617.33p |
| Net asset value (including income)1: | 619.22p |
| Share price: | 634.00p |
| Premium to NAV (including income): | 2.4% |
| Premium to NAV (including income)1: | 2.4% |
| Net gearing: | 5.1% |
| Net yield2: | 1.0% |
| Total assets (including income): | £562.4m |
| Ordinary shares in issue3: | 90,828,101 |
| 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 19,500,837 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 | 25.8 | Switzerland | 19.9 |
| Industrials | 24.3 | Denmark | 18.2 |
| Consumer Discretionary | 18.1 | Netherlands | 16.3 |
| Health Care | 15.6 | France | 14.3 |
| Financials | 4.4 | Sweden | 5.9 |
| Consumer Staples | 4.1 | Italy | 4.9 |
| Basic Materials | 3.9 | Russia | 4.9 |
| Energy | 3.7 | Germany | 3.5 |
| Net Current Assets | 0.1 | United Kingdom | 3 |
| —– | Spain | 2.3 | |
| 100 | Poland | 2.1 | |
| ===== | Finland | 1.8 | |
| Ireland | 1.6 | ||
| Israel | 1.2 | ||
| Net Current Assets | 0.1 | ||
| —– | |||
| 100 | |||
| ===== |
| Top 10 holdings | Country | Fund % |
| ASML | Netherlands | 7.4 |
| Kering | France | 6.5 |
| Lonza Group | Switzerland | 5.6 |
| Sika | Switzerland | 5.3 |
| DSV | Denmark | 4.9 |
| Novo Nordisk | Denmark | 4.4 |
| Royal Unibrew | Denmark | 4.1 |
| Netcompany Group | Denmark | 3.3 |
| Hexagon | Sweden | 3.1 |
| RELX | United Kingdom | 3.0 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV rose by 4.1% and the share price by 4.3%. For reference, the FTSE World Europe ex UK Index returned 1.8% during the period.
Europe ex UK markets rose again in June. Despite limited stock specific news over the month, markets were aided by continued progress on vaccination campaigns and positive economic data. Market implied inflation expectations continued to fall from the peak in mid-May, indicating that many market participants believe the currently elevated inflation prints to be transitory, a view we have supported for a while.
The market was led by health care and technology while utilities and financials were behind. The Company outperformed its reference benchmark, driven by strong stock selection while sector allocation was also positive. In sector terms, the Company’s lower allocation to financials and utilities aided returns, as did a higher allocation to technology. A higher allocation to consumer services detracted from performance.
The health care sector was the largest contributor to relative performance, largely driven by strong stock selection. Lonza was the top contributor over the month following a period of relative underperformance. There was minimal stock specific news aside from the announcement that the Food and Drug Administration (FDA) had approved an Alzheimer’s drug from US biotech company Biogen. While Lonza was not specifically linked to the news, production of the drug would likely be outsourced, adding to tightness in manufacturing capacity.
Danish diabetes specialist Novo Nordisk also contributed following an FDA approval for its weight management drug Wegovy. Elsewhere in the sector, DiaSorin also performed well.
Our semiconductor companies, including BESI, ASML and VAT Group also contributed to portfolio performance. We are continuing to see evidence of very strong momentum in these end markets: BESI recently raised their top line guidance, and ASML’s key EUV machines are now sold out to 2024.
Positive contribution also came from two of our Russian stocks. Shares in oil company Lukoil and e-commerce platform Ozon rose over the month. We believe the latter is well placed to benefit from the ongoing shift to online shopping, as Russia still has some of the lowest e-commerce penetrations in the world.
Negative contribution came from not owning Roche. The above-mentioned news around Biogen’s Alzheimer drug was seen as a positive development given Roche are developing their own Alzheimer drug.
Some of our ‘recovery’ plays detracted from returns as concerns over COVID variants pushed back further travel and re-opening expectations. Companies included in this group are Safran and Amadeus. Our holding in luxury name Kering also struggled; however, we expect shares to pick up when travel restrictions continue to lift. We took advantage of the weakness and added to both Amadeus and Kering.
At the end of the period, the Company had a higher allocation than the reference index towards technology, consumer discretionary, industrials and 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 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.
