BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC: Portfolio Update
BLACKROCK GREATER EUROPE INVESTMENT TRUST plc All information is at 31 August 2013 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) -4.2% -1.5% 28.6% 43.3% 173.2% Net asset value (Diluted) -3.5% -1.2% 28.8% 43.2% 172.9% Share price 0.2% 1.3% 33.7% 54.9% 167.6% FTSE World Europe ex UK -3.7% -1.3% 26.3% 32.4% 113.2% Sources: BlackRock and DataStream
At month end Net asset value (capital only): 227.89p Net asset value (including income): 234.68p Net asset value (capital only)*: 228.79p Net asset value (including income)*: 234.38p Share price: 228.75p Discount to NAV (including income): 2.5% Discount to NAV (including income)*: 2.4% Subscription share price 23.38p Gearing: 4.2% Net yield: 1.8% Total assets (including income): £266.0m Ordinary shares in issue: 108,719,211** Subscription shares in issue 23,184,318
* Dilutedfor subscription shares and treasury shares. ** Excluding 5,718,353 shares held in treasury.
Benchmark Sector Analysis Total Assets (%) Index (%) Country Analysis Total Assets (%)
Financials 23.6 22.1 France 21.1 Consumer Goods 16.1 18.6 Switzerland 18.5 Health Care 14.8 12.1 Germany 17.1 Industrials 13.9 5.7 Netherlands 15.7 Consumer Services 11.4 13.9 Belgium 6.1 Technology 10.8 3.7 Sweden 5.4 Basic Materials 5.5 8.4 Denmark 4.2 Telecommunications 3.7 4.1 Russia 3.7 Oil & Gas 1.1 7.6 Ireland 3.5 Utilities - 3.8 Spain 2.2 Net current liabilities (0.9) - Finland 1.0
----- ----- Portugal 1.0 100.0 100.0 Hungary 0.8 ===== ===== Ukraine 0.6
Net current liabilities (0.9)
----- 100.0 =====
Ten Largest Equity Investments (in alphabetical order)
Company Anheuser Busch Belgium Bayer Germany Continental Germany Novo Nordisk Denmark Reed Elsevier Netherlands Roche Switzerland Sanofi France SAP Germany Swiss Re Switzerland Zurich Insurance Switzerland
Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:
During the month, the Company's NAV fell by 4.2% and the share price gained 0.2%. For reference, the FTSE World Europe ex UK Index decreased by 3.7% during the same period.
European equities were down during August despite the gathering evidence of an improvement in the domestic economy and a decline in peripheral government bond yields. Political tensions in the Middle East and North Africa and surprisingly positive data from China contributed to commodities reporting their best performance since January. Although volumes were relatively low for much of the month, there was a noticeable reversal in momentum within the market. Market level volatility also increased. Less loved sectors such as basic materials, telecoms and oil & gas outperformed at the expense of real estate, travel & leisure and insurance.
Although the Company's share price significantly outperformed the broader market, the underlying NAV actually fell by more than the market. Both stock selection and sector allocation caused losses for the Company when compared with the broader market. As mentioned above, previously out of favour sectors outperformed during August. Consequently, the Company's underweight position to oil & gas detracted from returns as the sector significantly outperformed the broader market. We have not changed our view on the sector as a result of this and remain underweight given our concerns over the lack of growth prospects for oil majors and declining levels of capital expenditure in the sector.
Stock selection proved challenging in the consumer goods and consumer services sectors. Positions in German auto supplier Continental and French auto business Renault both detracted within the consumer goods sector and Ryanair detracted within the consumer services sector. Within health care, a position in Sanofi performed poorly after reporting poor results for the second quarter of 2013, but we continue to like the long-term potential of the business.
Better performance came from selected financials, as companies with a higher sensitivity to economic performance performed. The most successful positions included retail bank KBC, asset manager GAM and insurance business Allianz.
At the end of the month, the portfolio had higher weightings (when compared with the broad market index) in consumer services, financials, technology and health care, and lower weightings in basic materials, telecoms, consumer goods, oil & gas, industrials and utilities. At the end of August, the portfolio was geared by 4.2%.
Outlook In August, the European business expectations moved to a positive stance for the first time in two years. Expectations for the UK service economy were also strong, as was Eurozone consumer confidence, reinforcing the view that recovery is under way. Chinese industrial production rebounded on the back of improving export demand as well as accelerations in infrastructure and other building activities.
Supportive monetary policies, recovering economic momentum and a relatively stable political backdrop, notwithstanding some uncertainty ahead of the German elections in September and the unsteady political situation in Italy, provides a reassuring environment for European equities and is consistent with our thesis that the Eurozone should continue to improve into 2014. We expect that the European Equity asset class will continue to be supported by ongoing shifts in investor allocation towards Europe as more supportive evidence of an improving macro picture emerges.
13 September 2013
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.
-0- Sep/13/2013 15:42 GMT