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Industrials overweight boosts BlackRock Greater Europe

A strong performance from its overweight in the industrials sector  and a focus on investing in companies able to benefit from emerging market exposure allowed the BlackRock Greater Europe investment to comfortably outperform its benchmark in the six months to 28 February.

 

A strong performance from its industrials sector holdings and a focus on investing in companies able to benefit from emerging market exposure allowed the  BlackRock Greater Europe  investment trust to comfortably outperform its benchmark in the six months to the end of February.

The trust, managed by Citywire AA-rated Vincent Devlin, produced a net asset value rise of 9.4% in the six months to the end of February, doubling the return of its benchmark FTSE World Europe ex UK for the same period.

The share price increased by 8.7% over the six month time frame while since 28 February, the trust has posted a further 10.8% and 11.1% rise in NAV and share price respectively.

The outperformance was partially aided by proceeds being hedged back to sterling as the Euro made strong gains against the currency over the period.

In the year to the end of March, the £187 million market cap fund was placed second in the 10 - strong Europe investment trust sector in terms of NAV performance, posting a rise of 62.5%, while its discount stood at 4.6% on 13 April.

The trusts directors exercised  their discretion to operate the half yearly tender offer on 30 November 2009 for up to a maximum 20% of the shares in issue at the prevailing net asset value less 2%.

The tender offer was undersubscribed with 3,440,129 shares in issue being tendered at a price of 169.84p per share, representing 3.27% of the Company's shares in issue, excluding treasury
shares.

The board said that all shares tendered had been placed in treasury and the 1,696,092 shares
previously held in treasury had now been cancelled as part of the trust's discount control policy.

Devlin said the trust had made its strongest gains in September 2009, when the FTSE World Europe ex UK Index gained 9.5%, while performance had been more volatile since, with monthly gains and losses being recorded.

He said that developed Europe fund weightings had had a greater impact on the portfolio's positive performance compared to its emerging Europe holdings, although emerging Europe outperformers included positions in Russian utility company Rushydro, and Hungarian bank OTP Bank.

He added: 'On average, the Company was moderately geared as we continued to maintain higher levels of conviction.

Within the strongly performing industrials positions - an overweight compared to the index - Devlin singled out Swiss freight company Kuehne + Nagel and Dutch oil storage company Vopak.

'Vopak is a high quality company with `defensive' earnings characteristics and high barriers to entry. [It] benefited from strong earnings reports and December's announcement of a joint venture in the Middle East that was well received by the market, as it offered additional exposure to emerging market growth,' he said.

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