BlackRock Greater Europe Investment Trust Plc - Portfolio Update
PR Newswire
London, July 15
The information contained in this release was correct as at 30 June 2020. 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 June 2020 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) | 6.9% | 24.5% | 10.8% | 40.5% | 479.9% |
| Net asset value* (diluted) | 6.9% | 24.4% | 10.7% | 40.4% | 480.2% |
| Share price | 6.8% | 32.5% | 12.5% | 42.1% | 466.5% |
| FTSE World Europe ex UK | 4.9% | 18.9% | 0.5% | 11.3% | 268.5% |
* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream
At month end
| Net asset value (capital only): | 432.54p |
| Net asset value (including income): | 436.48p |
| Net asset value (capital only)1: | 432.54p |
| Net asset value (including income)1: | 436.48p |
| Share price: | 422.00p |
| Discount to NAV (including income): | 3.3% |
| Discount to NAV (including income)1: | 3.3% |
| Net cash: | 8.5% |
| Net yield2: | 1.4% |
| Total assets (including income): | £368.1m |
| Ordinary shares in issue3: | 84,323,101 |
| Ongoing charges4: | 1.1% |
1 Diluted for treasury shares.
2 Based on a final dividend of 4.10p per share for the year ended 31 August 2019 and an interim dividend of 1.75p for the year ending 31 August 2020.
3 Excluding 26,005,837 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 2019.
| Sector Analysis | Total Assets (%) | Country Analysis | Total Assets (%) | |
| Technology | 24.5 | Denmark | 17.8 | |
| Health Care | 18.5 | Switzerland | 13.4 | |
| Industrials | 17.6 | Netherlands | 12.5 | |
| Consumer Goods | 10.5 | France | 12.0 | |
| Financials | 9.8 | Germany | 9.7 | |
| Consumer Services | 9.6 | Italy | 6.7 | |
| Oil & Gas | 3.6 | Russia | 5.5 | |
| Basic Materials | 3.0 | Sweden | 5.3 | |
| Telecommunications | 2.5 | United Kingdom | 4.6 | |
| Net Current Assets | 0.4 | Spain | 2.8 | |
| ------- | Belgium | 2.5 | ||
| 100.0 | Israel | 2.0 | ||
| ==== | Finland | 1.8 | ||
| Ireland | 1.8 | |||
| Poland | 0.9 | |||
| Greece | 0.3 | |||
| Net Current Assets | 0.4 | |||
| ------- | ||||
| 100.0 | ||||
| ==== |
| Ten Largest Equity Investments | ||
| Company | Country | % of Total Assets |
| ASML | Netherlands | 6.6 |
| Novo Nordisk | Denmark | 5.6 |
| SAP | Germany | 5.5 |
| Sika | Switzerland | 5.4 |
| Kering | France | 5.1 |
| Lonza Group | Switzerland | 5.0 |
| RELX | United Kingdom | 4.6 |
| Royal Unibrew | Denmark | 4.4 |
| DSV | Denmark | 4.0 |
| Safran | France | 3.3 |
Commenting on the markets, Stefan Gries, representing the Investment Manager, noted:
During the month, the Company's NAV rose by 6.9% and the share price by 6.8%. For reference, the FTSE World Europe Ex UK Index returned 4.9% during the period.
Europe ex UK markets continued their strong performance in June as countries eased lock-down restrictions, allowing economies to re-start. The release of global data during the month boosted sentiment, as PMIs in Europe and the US suggested that activity is surprising on the upside. Europe's flash PMIs posted larger than expected gains across the board. An impressive array of fiscal and monetary measures in Europe is getting into place to bridge the economy through this period of weakness. The latest data points and messages from companies suggest a strong cyclical recovery is underway. We believe the stimulus and the European Union (EU) recovery fund can reduce the risk premia in Europe and improve investors' appetite towards the region overall. Against this backdrop, cyclicals led the market with the financials and technology sectors rallying, while healthcare and consumer services underperformed the overall market.
The Company outperformed the reference index over the month, driven by both strong sector allocation and stock selection. In sector terms, the Company benefited from a higher allocation to the technology and industrials sectors, as well as from its lower allocation to consumer goods. Underweight exposures to financials and higher allocations to consumer services and healthcare detracted.
The technology sector was the largest contributor to returns. The Company's holdings in semiconductor names ASML and BE Semiconductor contributed to returns. These companies have performed well throughout the COVID period as demand for remote connectivity solutions increased. We believe demand for chips will continue to grow as the trend towards digitalisation is set to continue. They are well positioned to benefit from the roll out of 5G handsets and infrastructure, as well as more general investment in data centres, cloud computing and high performance computing power.
Also, within the technology sector, the Company benefited from avoiding Wirecard as shares collapsed with the company forced to file for insolvency on the back of an announcement that there was insufficient evidence to account for €1.9bn of cash. While we did not hold Wirecard, we do hold a position in Wirecard's competitor Adyen which is likely to benefit by picking up market share in an otherwise highly consolidated sector.
Positive contribution also came from the positioning within industrials. Sika, a global leader in construction chemicals, was the single best performer during the month, benefiting from better sentiment in construction. Shares correlated to global trade also performed strongly. DSV Panalpina, the Danish transport and logistics company, aided performance as the company said the second quarter had developed better than expected considering the COVID crisis. More resilient than expected global trade combined with a strong management team and business execution led to DSV beating Q2 profit expectations by almost 100%.
While an underweight to the financials sector detracted, stock selection was positive. In particular, the Company's position in FinecoBank was amongst the best performers. The business is thriving with total financial assets under administration growing to €82.6bn (+9% year over year) to the end of June despite the clearly difficult market environment, which for us is testament to the strength of its asset gathering model. KBC also contributed to returns, although Russian Sberbank lagged the market rally. Elsewhere, not owning a number of large cap defensive index constituents like Roche, Nestlé and Novartis contributed positively too.
In vitro diagnostics company Diasorin was the largest detractor for the month. The stock experienced some profit taking after a strong rally, with shares up almost 60% on a year-to-date basis (as of 30 June 2020). Novo Nordisk and Grifols also contributed negatively. While both stocks lagged the cyclical rally, Grifols also suffered on concerns around new competition emerging for some of its products. We believe those concerns are unfounded and see no change in the medium to longer term attraction of the investment case.
Lastly, on the negative side, RELX detracted from the Company's returns due to increasing evidence of library budgets temporarily coming under pressure on the back of COVID-19 related disruptions. We see those issues as largely transitory in nature and would point to the fact that RELX's STM division - home to its journals business - has never posted negative revenue growth in the last 70 years, which to our mind highlights the resilience of the model.
At the end of the period, the Company had a higher allocation than the reference index towards technology, consumer services, industrials and health care. The Company had a neutral weighting towards oil & gas and telecoms and an underweight allocation to consumer goods, financials, utilities and basic materials.
Outlook
Over recent years, many investors have avoided exposure to European equities owing to concerns around political risk, rising populism, a challenged financial system and the region's larger than average exposure to China. We have long been of the view that one needs to take an active approach to investing in European equities. With this in mind, we did not need to be positive on Europe as a region to offer our shareholders exposure to some truly unique companies that happened to be listed in the region. The response to the fallout from COVID-19 has the potential to change that view. For the first time we see a strong and coordinated monetary and fiscal response that could deliver real benefits to the region over time. The proposed EU recovery fund of €750bn, which calls for debt mutualisation among member states, could act as a catalyst to reduce risk premium applied to European equities versus other developed markets and create greater, and lasting, political cohesion in the region. In this context, both the economy and local stock markets appear well positioned to make up lost ground, potentially transforming European equities into a standout opportunity in the developed world.
15 July 2020
ENDS
Latest information is available by typing www.brgeplc.co.uk 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.
