BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC: Portfolio Update
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc All information is at 31 October 2012 and unaudited.
Performance at month end with net income reinvested
One Three One Three Since launch
Month Months Year Years (20 Sep 04) Net asset value* (Undiluted) 1.8% 6.2% 10.7% 23.9% 123.5% Net asset value* (Diluted) 1.9% 5.6% 10.1% 23.3% 122.3% Share price 3.2% 8.7% 6.7% 23.1% 117.7% FTSE World Europe ex UK 2.2% 7.7% 6.3% 6.7% 75.3% Sources: BlackRock and Datastream
* Net asset value and share price performance includes the subscription share reinvestment, assuming the subscription share entitlement per share was sold and the proceeds reinvested on the first day of trading.
At month end Net asset value (capital only): 189.47p Net asset value (including income): 189.50p Net asset value (capital only)**: 188.41p Net asset value (including income)**: 188.43p Share price: 183.50p Discount to NAV (including income): 3.2% Discount to NAV (including income)**: 2.6% Subscription share price: 0.35p Gearing: 6.1% Net yield: 2.3% Total assets (including income): £241.6m Ordinary shares in issue: 119,793,123 Subscription shares in issue: 23,484,013
** Diluted for subscription shares. *** Excluding 4,760,637 shares held in treasury.
Benchmark Sector Analysis Total Assets (%) Index (%) Country Analysis Total Assets (%)
Consumer Goods 21.2 19.0 Switzerland 24.1 Industrials 18.4 15.0 Germany 20.0 Basic Materials 12.5 8.4 France 12.5 Financials 11.2 20.3 Spain 9.1 Health Care 10.8 12.8 Netherlands 6.6 Oil & Gas 9.8 6.9 Sweden 6.0 Consumer Services 9.2 5.2 Denmark 4.9 Telecommunications 5.5 4.3 Russia 4.3 Technology 4.2 3.4 Finland 3.6 Utilities 2.0 4.7 Hungary 2.4 Net current liabilities (4.8) - Portugal 2.2
----- ----- Belgium 2.2
100.0 100.0 Ireland 2.1
===== ===== Italy 1.8
Net current liabilities (4.8)
Ten Largest Equity Investments (in alphabetical order)
Company Country of Risk BASF Germany Cie Financiere Richemont Switzerland Continental Germany Electrolux Sweden Inditex Spain Novo Nordisk Denmark Roche Switzerland Schneider Electric France Swiss Re Switzerland Zurich Insurance Switzerland
Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:
During the month, the Company's NAV rose by 1.8% and the share price increased by 3.2%. For reference, the FTSE World Europe ex UK Index rose by 2.2% during the same period.
European equities delivered a positive return during October, outperforming most other major markets. During the month, value slightly outperformed growth and the more economically sensitive sectors, such as banks, real estate, insurance and autos were the best performing, while the telecoms, chemical and health care sectors were the worst performers.
Stock selection proved positive during the month, while sector-level allocation offset these gains. The Company's structurally lower weight to financials proved the largest detractor from returns as the sector continued to rally following the supportive policy action taken by the ECB and other central banks during the third quarter. In addition, the Company's higher allocations to basic materials and oil & gas detracted from returns as economic momentum in domestic Europe continued to disappoint.
At a stock level, selected industrial businesses performed especially well. A holding in EADS re-bounded from its previous losses after the proposed merger with BAE was called off. Positions in airline Deutsche Lufthansa and Scandinavian industrial Wartsila both contributed to returns; Wartsila reported orders for the third quarter of 2012 that were 17% ahead of consensus, leading to an upgrade of the management team's outlook. The Company's holdings in Eurozone banks BNP Paribas and Deutsche Bank saw gains as the sector continued to rally. A new position in Volkswagen benefited from strong sales trends in emerging markets.
Less successful positions included wine and spirits business Pernod Ricard and Renault, which suffered from falling demand in domestic European autos. The Company also suffered from the decision to not own a holding in UBS, which performed strongly at the end of the month after the company announced a significant re-structuring plan.
At the end of October, the Company had higher weights (when compared with the FTSE World Europe ex UK Index) in basic materials, industrials, consumer services, consumer goods, oil & gas and technology and lower weights in financials, health care, utilities and telecoms.
Outlook On aggregate, economic data this month has been relatively positive, notably in the US. In Europe, the data has been mixed with the aggregate PMI stabilizing while the German IFO contracted. Weaker European economic data is not unexpected but forward looking leading indicators are pointing to a recovery in the medium term. With continued progress towards fiscal integration, Spain's potential request for support and the ECB's commitment to keeping the Eurozone intact there is a potential for the risk premium on European equities to fall further from elevated levels and we have already seen peripheral yields fall further in October.
Despite the market rally in European equities since the beginning of the year, Europe remains a very attractive market on a number of valuation metrics. On a price to earnings (P/E) basis Europe is attractive relative to history, relative to US equities and offers an attractive dividend yield of circa 4%.
However, the European political path to closer fiscal integration is not without its uncertainties and a number of economic hurdles remain. Given this backdrop we remain focused on companies with proven business models and attractive earnings growth. In addition, we continue to seek the most selective investment opportunities in oversold areas within the periphery.
15 November 2012
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.
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