BLACKROCK
GREATER EUROPE INVESTMENT TRUST
PLC (LEI - 5493003R8FJ6I76ZUW55)
All
information is at
31 March
2024 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)
|
2.2%
|
12.7%
|
20.3%
|
29.7%
|
834.9%
|
Share
price
|
1.4%
|
12.7%
|
21.5%
|
23.4%
|
797.0%
|
FTSE
World Europe ex UK
|
3.7%
|
6.9%
|
13.8%
|
31.8%
|
450.9%
|
Sources:
BlackRock and Datastream
At month
end
Net
asset value (capital only):
|
671.09p
|
Net
asset value (including income):
|
673.12p
|
Share
price:
|
638.00p
|
Discount to NAV
(including income):
|
5.2%
|
Net
gearing:
|
10.1%
|
Net
yield1:
|
1.1%
|
Total
assets (including income):
|
£675.6m
|
Ordinary shares
in issue2:
|
100,363,934
|
Ongoing
charges3:
|
0.98%
|
1 Based on an
interim dividend of 1.75p per share, and a final dividend of 5.00p
per share, for the year ended 31 August
2023.
2 Excluding
17,565,004 shares held in treasury.
3 The Company’s
ongoing charges are calculated as a percentage of average daily net
assets and using the management fee and all other operating
expenses excluding finance costs, direct transaction costs, custody
transaction charges, VAT recovered, taxation, write back of prior
year expenses and certain non-recurring items for the year ended
31 August 2023.
Sector
Analysis
|
Total
Assets (%)
|
Industrials
|
25.2
|
Consumer
Discretionary
|
22.8
|
Technology
|
21.5
|
Health
Care
|
15.2
|
Financials
|
8.6
|
Basic
Materials
|
5.5
|
Consumer
Staples
|
1.1
|
Net
Current Assets
|
0.1
|
|
-----
|
|
100.0
|
|
=====
|
|
|
|
|
|
Country
Analysis
|
Total
Assets (%)
|
France
|
22.0
|
Netherlands
|
20.2
|
Switzerland
|
17.6
|
Denmark
|
12.6
|
United
Kingdom
|
6.4
|
Sweden
|
5.7
|
Ireland
|
5.3
|
Italy
|
3.8
|
United
States
|
2.8
|
Belgium
|
1.8
|
Germany
|
1.7
|
Net
Current Assets
|
0.1
|
|
-----
|
|
100.0
|
|
=====
|
|
|
|
|
Top 10 holdings
|
Country
|
Fund %
|
Novo
Nordisk
|
Denmark
|
9.0
|
ASML
|
Netherlands
|
7.2
|
LVMH
|
France
|
6.2
|
RELX
|
United
Kingdom
|
5.8
|
Hermès
|
France
|
4.2
|
BE
Semiconductor
|
Netherlands
|
4.0
|
Safran
|
France
|
3.9
|
Ferrari
|
Italy
|
3.8
|
ASM
International
|
Netherlands
|
3.4
|
Partners
Group
|
Switzerland
|
3.2
|
|
|
|
|
Commenting
on the markets, Stefan Gries and
Alexandra Dangoor, representing the
Investment Manager noted:
During the month,
the Company’s net asset value rose by 2.2% and the share price was
up by 1.4%. For reference, the FTSE World Europe ex UK Index
increased by 3.7% during the period.
Europe ex UK markets were up during March,
finishing an exceptionally strong quarter for European equities.
Following two months of strong performance of growth assets, value
sectors led strong market returns during March. Lower quality
cyclicals such as financials and energy delivered impressive
performance, while real estate and utilities also rebounded post a
tougher period. Technology and the consumer sectors underperformed
in the rising market. Stock specific news flow was slightly lighter
during the month as the earnings season largely came to an end.
Macroeconomic data remained robust. Eurozone and US inflation data
continued to head towards central bank targets, whilst economic
activity continued to improve.
The
Company underperformed its reference index during the month, driven
by both sector allocation and stock selection. In sector terms, the
Company’s lower weight to the financial sector was negative for
returns as particularly the banking sector delivered strong
performance during the month. The Company’s higher allocation to
technology was the largest detractor from returns as the sector saw
somewhat of a reversal after very strong performance in January and
February. The portfolio benefited from lower weights in consumer
staples and telecommunications.
The
technology sector was the largest detractor from relative returns.
The sector gave back some of its very strong performance in
previous months. Additionally, BE Semiconductor (Besi) was hit by
negative newsflow, which led to shares falling close to 15%. Press
reports during the month suggested that the adoption of Besi’s
hybrid bonding offering may be slower than some had hoped for,
specifically in the high bandwidth memory applications. While the
short-term uptake of this new technology may be delayed for a short
period, we think it is likely that hybrid bonding will play a
significant role in high bandwidth memory production in future
years and so our medium-term view on the stock is
unchanged.
Exposure to the
consumer discretionary sector was also negative as particularly the
luxury industry was dragged down by Kering’s (not held in the
Company) profit warning. Whilst not owning Kering was positive,
shares in LVMH stumbled in sympathy despite no fundamental
newsflow.
A
mixed contribution came from the banking sector during the month.
The sector was up on a mix of generally better economic activity,
rate expectations holding up better than some had feared and
support from share buybacks. Allied Irish
Banks was the top contributor during March after reporting
strong 2023 results with good revenue visibility. However, not
owning BBVA, BNP Paribas and Banco Santander detracted from
relative returns.
A
number of shares from the industrials sector performed well – for
example, IMCD rose on signs that destocking in some end markets is
coming to an end. The company reported FY 2023 results in line with
expectations, while 2024 consensus estimates seem to be in a good
place compared to the updates provided by management.
Positioning
within health care continues to be additive with a positive effect
from owning Novo Nordisk and Lonza, while avoiding more defensive
assets such as Roche and Novartis that continue to lag the market
gains. The investment case for Novo Nordisk continues to tick along
nicely with news in March supportive of a growing total addressable
market for their GLP-1 treatments. The US approved Wegovy for
cardiovascular risk reduction in people with obesity, and in doing
so, opened the door for Medicare coverage. Late in the month, we
saw the first US insurers agree to begin paying for Wegovy through
Medicare.
Outlook
We
remain fairly constructive on European equities as the set-up
should be positive: inflation is on a downwards trajectory and the
economy appears relatively robust, Eurozone inflation figures have
fallen and, whilst there may be volatility in month-to-month data,
the economy can handle these levels of inflation. This also means
that we have come to, or are close to, peak rates and at some
point, it is fair to assume interest rates will come down. We have
already started to see a positive impact on falling mortgage rates
in many European countries.
The
corporate sector in Europe is
healthy. There is limited corporate debt, margins are strong, there
is no need for major layoffs and the end of the destocking across
most industries is in sight. This in turn is good news for the
consumer: a supply chain and energy crisis that is largely done,
combined with high employment numbers and falling inflation suggest
that the cost-of-living crisis has cooled off. This puts the region
in a much better position compared to one year ago.
Nevertheless, the
asset class has been under-owned ever since the Russian invasion of
Ukraine in February 2022. As always in Europe, it is key to remain selective.
Assessing the economy from the bottom-up can uncover areas for
greater optimism than traditional economic indicators may suggest.
Our regular contact with management teams helps us understand
whether the direction of earnings and cashflows on a medium to
long-term view for the companies in our portfolio remain on
track.
Long-term
structural trends and large amounts of fiscal spending via the
Recovery fund, Green Deal and the REPowerEU plan in Europe can also drive demand for years to
come, for example in areas such as infrastructure, automation,
innovation in medicines, the shift to electric vehicles,
digitisation or decarbonisation. Valuations are attractive versus
history and especially versus US equities. Overall, evidence of a
resilient consumer, healthy corporate sector and decent outlooks
underpinned by green stimulus, give us confidence that many of the
companies in our portfolio can continue to weather the
storm.
ENDS
Latest
information is available by typing www.blackrock.com/uk/brge
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.
24 April 2024