BlackRock Greater Europe posts sector-beating returns - annual report summary


Our annual report summary series delivers a condensed analysis of a selected investment trust's annual report, including details of the trust's aim, investment style, portfolio focuses, gearing policy, charges and performance.


BlackRock Greater Europe Investment Trust (BRGE) aims for capital growth through investment in a focused portfolio of continental European companies. Up to 25 per cent can be invested in companies in developing Europe. BRGE's annual report for the year to 31 August 2016 shows shareholders' assets of £295 million.

Vincent Devlin and Sam Vecht have been managers since 2008, with the latter responsible for developing Europe stocks. Given the uncertain outlook, their focus is mainly on quality companies with rising dividends, strong cash flows and the ability to succeed even in a low-growth environment.

At 31 August 2016 BRGE held 59 investments and developing Europe accounted for 8.2 per cent of the portfolio (mainly in Russia and Turkey).

It was very underweight in companies capitalised at over €50 billion (£44 billion), whereas those capitalised at between €1 billion and €10 billion accounted for an overweight 32 per cent.

blackrock-greater-europe-three-year-performanceThe largest sectors were industrials at 28.8 per cent, financials at 18.5 per cent and consumer goods at 18.3 per cent. Gearing was negligible throughout the year.

Net asset value (NAV) total returns last year were 16.9 per cent, outperforming the 15.4 per cent rise in BRGE's benchmark, the FTSE World Europe ex UK index.

Sterling devaluation following the Brexit vote contributed substantially to both.

Share price total returns of 13.8 per cent were the best in the Europe sector over one year, but BRGE ranks seven out of eight over three years.

The dividend was raised 6 per cent to 5.3p. Ongoing charges fell to 1.07 per cent following the 2015 removal of the performance fee in return for a higher base fee.

BRGE's board used its option to make half-yearly tenders for up to 20 per cent of the shares at NAV less a 2 per cent discount in November 2015, and again a year later, but not in May 2016. The take-up was only 1.19 per cent in 2015 and 6.45 per cent in 2016.

See the full annual report on the BlackRock website.

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