BlackRock Greater Europe Investment Trust: Portfolio Update
The information contained in this press release was correct as of August 31, 2021. Information on the Company’s current net asset values ​​is available on the London Stock Exchange website at:
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACK ROCK GREATER EUROPE PLC TRUST INVESTMENT (LEI – 5493003R8FJ6I76ZUW55)
All information is on August 31, 2021 and unaudited.
End-of-month performance with net income reinvested
| A Month |
Three Month |
A Year |
Three Years |
To throw (20 Sep 04) |
|
| Net asset value (undiluted) | 4.1% | 14.1% | 49.1% | 85.5% | 812.9% |
| Net asset value * (diluted) | 4.1% | 14.1% | 49.1% | 85.4% | 813.4% |
| Share price | 4.2% | 13.8% | 56.8% | 99.6% | 841.0% |
| FTSE World Europe excluding UK | 2.8% | 6.4% | 27.4% | 34.5% | 372.9% |
* Diluted for own shares and subscription shares.
Sources: BlackRock and Datastream
At the end of the month
| Net asset value (capital only): | 676.41p |
| Net asset value (including income): | 678.52p |
| Net asset value (capital only)1: | 676.41p |
| Net asset value (including income)1: | 678.52p |
| Share price : | 692.00p |
| Net asset value premium (including income): | 2.0% |
| Net asset value premium (including income)1: | 2.0% |
| Net gear: | 4.8% |
| Net return2: | 0.9% |
| Total assets (including income): | £ 651.8 million |
| Common shares outstanding3: | 96 055 411 |
| Ongoing charges4: | 1.0% |
1 Diluted for own shares.
2 Based on a final dividend of 4.40p per share for the financial year ended August 31, 2020 and an interim dividend of 1.75p per share for the financial year ended August 31, 2021.
3 Excluding 17,573,527 treasury shares.
4 Calculated as a percentage of average net assets and using charges, excluding interest charges, after tax relief, for the year ended August 31, 2020.
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| 10 main titles | Country | Fund% |
| ASML | Netherlands | 7.8 |
| Lonza Group | Switzerland | 5.8 |
| Sika | Switzerland | 5.1 |
| Kering | France | 4.8 |
| DSV | Denmark | 4.6 |
| Novo Nordisk | Denmark | 4.5 |
| RELX | UK | 4.0 |
| Royal Unibrew | Denmark | 3.6 |
| Netcompany Group | Denmark | 3.3 |
| hexagon | Sweden | 3.2 |
Commenting on the markets, Stefan Gries, representing the Investment Manager noted:
During the month, the Company’s NAV increased 4.1% and the share price increased 4.2%. As a benchmark, the FTSE World Europe ex UK Index returned 2.8% during the period.
Europe Markets outside the UK continued to increase in August. Technology, utilities and healthcare dominated the market while the consumer sectors lagged behind.
In what is generally a calm month, this month of August was characterized by buoyant markets. While most of our favorite companies have continued to make gains after a strong earnings season, optimism about the ongoing economic recovery has been slightly shaken, driven both by concerns about the fast-spreading Delta variant. , as well as the growing threat of Chinese regulation.
The Company outperformed its benchmark, thanks to both stock selection and sector allocation. In sector terms, the Company’s higher allocation to technology and industrials supported returns, as did a lower allocation to consumer goods. However, a higher allocation to consumer services and an underweight to utilities and financials detracted. The latter was more than offset by strong stock selection, in particular a position in Polish bank Pekao which contributed to performance.
The healthcare sector was the biggest contributor to relative performance. Lonza was the top performer of the month after beating consensus estimates in the first half of the year, while also improving her forecast. We remain particularly encouraged both by the increase in margins demonstrated, as well as by management’s decision to reinvest the proceeds from the sale of Lonza’s specialty ingredients division in its core business at very attractive returns. Novo Nordisk was also a strong contributor, continuing to benefit from the momentum of strong second quarter numbers and the approval of its obesity drug. Elsewhere in the sector, DiaSorin was among the best performers.
ASML and VAT Group once again outperformed thanks to the continued tightening of the semiconductor market. ASML’s backlog reached a record level of 17.5 billion euros, and with visibility on certain tools now extending until the middle of the decade, we remain confident in the prospects for this activity.
The Company’s positioning in basic materials and industrial products also helped returns. A position in the distributor of chemicals IMCD was among the top performers of the month after very good results. Operational EBITA increased 46% in the first half of the year, underlining that its growth strategy remains on track. Within the industry, the payment company Adyen and the logistics name DSV recorded strong performances.
Negative performance came mainly from luxury names such as Kering and Hermes which underperformed as markets reacted to comments from Chinese executives regarding excessive consumption and a wealth redistribution plan. While our alternative real-time data sources show declining overall activity levels across the country following several COVID-related lockdowns and severe summer flooding, we cannot yet see a gradual decline in demand for luxury products. However, we believe there might be a period of uncertainty and hesitation in China as a result of these comments, and as we continue to value these companies over the long term, we have reduced our exposure slightly. Against this backdrop, not holding LVMH and Richemont was positive for returns.
Our position in the Amadeus travel computing platform fell as the markets digested the flow of information regarding the continued spread of the Delta variant. This includes some areas of the United States with particularly high hospitalization rates, as well as data from studies conducted in Israel suggesting that vaccine efficacy drops off rapidly after six to seven months, underscoring the need for “booster†vaccines. Suddenly, the resumption of international travel has once again shifted to the right.
Logitech stocks also struggled during the month, with video conferencing growth numbers slightly lower than expected. Company management attributed this to slower trends in EMEA, but remain confident with their forecast for 10-25% full-year growth. Games remained strong and Logitech continued to gain market share.
At the end of the period, the Company had a higher allocation than the benchmark towards Technology, Industrials, Consumer Discretionary, Health Care and Energy. The company was underweight financials, consumer staples, utilities, telecommunications, real estate and basic materials.
Outlook
We see that recent market strength will persist over the next few months, aided by improved virus testing capabilities, successful vaccine deployment and a resilient global consumer, as well as the pursuit of 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 restore dividends; others, however, like stocks exposed to travel, could see a significantly brighter year 2022. Inflation could be on the horizon, but interest rates will likely stay low. A period of prolonged negative real rates and higher nominal growth is needed to enable governments around the world to extricate themselves from post-pandemic debt distress. We see this as a favorable backdrop for equities in general.
September 21, 2021
ENDS
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