BlackRock Greater Europe Trust – December 2021 update

BlackRock Greater Europe Trust – December 2021 update

Stefan Gries and Sam Vecht have several years of combined experience investing in European companies and are supported by a strong team at BlackRock

The trust has delivered impressive returns under the tenure of the managers

A portion of the trust is invested in emerging European companies which is unique compared to others focused on Europe

How it fits in a portfolio

The BlackRock Greater Europe Trust invests in high quality companies across the European continent, including Switzerland, the Netherlands, Denmark, and France. A portion of the trust is also invested in emerging European countries, including Greece, Poland, and Russia which will increase risk. This is a slightly different approach to some other peers focused on investing in developed Europe.

The managers also have the flexibility to invest in companies of any size, including higher risk small to medium sized companies. We think the trust could be a good choice for exposure to European and emerging European companies or form part of a wider investment portfolio focused on long-term growth. When investing in closed-ended funds you should be aware the trust can trade at a discount or premium to NAV . Manager

Stefan Gries and Sam Vecht have managed the BlackRock Greater Europe Investment Trust since June 2017 and have several decades of combined experience in the industry.

Gries joined BlackRock’s European Equity team in 2008. Since then, he’s worked as an analyst, covering sectors like energy and pharmaceuticals, and has run multiple portfolios. In addition to this trust, he’s also lead and been co-manager of several other European open-ended funds.

Vecht runs a smaller part of the trust, focusing on the eastern European portion, but has been a co-manager since 2004. He’s also Head of the Emerging Europe & Frontiers team, and responsible for a range of emerging and frontier markets funds. This includes BlackRock Emerging Europe and BlackRock Frontiers Investment Trust. Vecht joined BlackRock in 2000 as part of the Global Emerging Markets team.

There have been a few changes within BlackRock’s European team over the past few years. That said, we think there are a number of high-quality individuals in the team, which Gries and Vecht can draw support from. Each team member is encouraged to discuss and debate investment ideas, providing challenge where necessary. Process

The trust’s investment process is simple. Invest in high-quality European businesses that will grow your investment over the long run. But what does high quality actually mean?

The managers use the vast resources of BlackRock and call upon the years of combined experience investing in Europe to help answer this question. They scour the continent looking for companies that typically possess four key traits: They are strong and focused management teams, healthy finances with stable returns, a willingness to invest in growth and a unique product or service that others in the market may struggle to replicate.

As a result, they tend to invest in a concentrated portfolio of companies they have a high level of conviction in. This means each one can have a meaningful impact on performance, and this increases risk.

Holding investments over the long term is another key part of the process. The average period they hold each company for is around five years. The managers believe this focus allows them to benefit from good levels of sustainable growth from the companies they hold. Typically, this means the portfolio turnover is kept quite low. That said, there have been several changes to the fund this year.

During the luxury goods sell-off in August this year, the team took the opportunity to add LVMH to the portfolio. It’s one of the leaders in the luxury goods space currently and has a growing presence in China. They also took advantage of some of the market volatility at the beginning of the year to add to Lonza Group. The Swiss biopharmaceuticals manufacturer has a rich pipeline of biological drugs and a strong position in the industry. They received a contract recently for the Moderna vaccine, so the managers thought it was sensible to top up their holding at a more attractive share price.

Other notable changes included some profit taking by reducing their holdings in Sberbank, Alpha Bank and KBC. These companies enjoyed some strong periods of performance following the success of the vaccine programme.

Investors should be aware that the managers have the flexibility to use gearing (borrowing to invest), which can magnify any gains or losses and increases risk. Culture

BlackRock is the largest asset manager in the world, with around $9.4 trillion of assets under […]

source BlackRock Greater Europe Trust – December 2021 update

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