BlackRock Grtr Eur Portfolio Update

 
TIDMBRGE 
 
The information contained in this release was correct as at 31 May 2022. 
Information on the Company's up to date net asset values can be found on the 
London Stock Exchange website at: 
 
https://www.londonstockexchange.com/exchange/news/market-news/ 
market-news-home.html. 
 
BLACKROCK GREATER EUROPE INVESTMENT TRUST PLC (LEI - 5493003R8FJ6I76ZUW55) 
 
All information is at 31 May 2022 and unaudited. 
 
Performance at month end with net income reinvested 
 
 
                                         One      Three      One    Three       Launch 
                                       Month     Months     Year    Years  (20 Sep 04) 
 
Net asset value (Undiluted)            -4.1%      -7.5%   -15.5%    39.8%       576.2% 
 
Share price                            -7.9%     -13.6%   -23.1%    37.2%       536.2% 
 
FTSE World Europe ex UK                 0.2%       0.5%    -1.5%    27.2%       338.1% 
 
 
Sources: BlackRock and Datastream 
 
 
At month end 
 
Net asset value (capital only):                                                 492.28p 
 
Net asset value (including income):                                             497.52p 
 
Share price:                                                                    463.00p 
 
Discount to NAV (including income):                                                6.9% 
 
Net gearing:                                                                       0.7% 
 
Net yield1:                                                                        1.4% 
 
Total assets (including income):                                                £509.0m 
 
Ordinary shares in issue2:                                                  102,300,411 
 
Ongoing charges3:                                                                 1.02% 
 
1  Based on a final dividend of 4.55p per share for the year ended 31 August 
2021 and an interim dividend of 1.75p per share for the year ending 31 August 
2022. 
2  Excluding 15,628,527 shares held in treasury. 
3  Calculated as a percentage of average net assets and using expenses, 
excluding interest costs, after relief for taxation, for the year ended 31 
August 2021. 
 
 
Sector Analysis          Total Assets     Country Analysis         Total Assets 
                                  (%)                                       (%) 
 
Industrials                      22.7     Switzerland                      19.9 
 
Health Care                      22.6     Denmark                          19.8 
 
Technology                       17.2     Netherlands                      16.6 
 
Consumer Discretionary           16.9     France                           13.8 
 
Financials                       11.7     Sweden                            7.0 
 
Consumer Staples                  6.0     United Kingdom                    6.7 
 
Basic Materials                   3.1     Italy                             5.8 
 
Net Current Liabilities          -0.2     Belgium                           2.6 
 
                                -----     Spain                             2.5 
 
                                100.0     Greece                            1.8 
 
                                =====     Ireland                           1.4 
 
                                          Germany                           1.2 
 
                                          Poland                            1.1 
 
                                          Net Current Liabilities          -0.2 
 
                                                                          ----- 
 
                                                                          100.0 
 
                                                                          ===== 
 
 
 
 
Top 10 holdings                                  Country                Fund% 
 
Novo Nordisk                                     Denmark                  8.4 
 
ASML                                             Netherlands              7.5 
 
LVMH Moët Hennessy                               France                   6.0 
 
Lonza Group                                      Switzerland              5.9 
 
RELX                                             United Kingdom           5.6 
 
DSV Panalpina                                    Denmark                  4.7 
 
Sika                                             Switzerland              4.4 
 
Royal Unibrew                                    Denmark                  3.8 
 
IMCD                                             Netherlands              3.1 
 
Hermès International                             France                   2.8 
 
 
Commenting on the markets, Stefan Gries, representing the Investment Manager 
noted: 
 
During the month, the Company's NAV fell by 4.1% and the share price by 7.9%. 
For reference, the FTSE World Europe ex UK Index returned 0.2% during the 
period. 
 
European ex UK equity markets continued to experience volatility during May. 
Assets associated with the value style outperformed growth assets as markets 
tried to factor in the impact higher rates might have on economic growth. 
 
As most market commentators worry about an economic slowdown, we see a very 
narrow market with defensives and commodities performing well, whilst most 
other sectors struggled. During May, energy, telecommunications and financials 
led the market while consumer sectors, health care and industrials were down in 
absolute terms. On the positive side, consumer and corporate balance sheets 
remain healthy and the Q1 corporate earnings season has shown the majority of 
companies in our portfolio continue to post robust results with a confident 
outlook for at least the immediate future. Industries that are experiencing 
accelerated demand as a result of the current crisis include spending on energy 
efficiency, renewables, infrastructure and defence. 
 
We continue to be in an environment where shares are being derated in 
anticipation of earnings downgrades. While we are not seeing downgrades 
materialising for the majority of companies in the portfolio right now, we have 
to acknowledge that the level of uncertainty in markets remains elevated, as we 
are far from getting to the end of this period of heightened inflation and 
potential economic slowdown. We tend to believe that in periods of slower 
growth, companies exposed to structural growth end markets, whose earnings may 
slow but not go negative, should ultimately be able to outperform cyclical 
areas of the market. These are the types of companies held in the portfolio. 
Overall, we retain our core exposure to companies with predictable business 
models, higher than average returns on capital, strong cash flow conversions 
and opportunities to reinvest that cash flow into future growth projects at 
high incremental returns. 
 
The Company underperformed its reference index during the month with both 
sector allocation and stock selection being negative. In sector terms, the 
Company's lower allocation to energy was negative for performance as the sector 
was the standout market leader in May. Given our preference towards owning 
quality businesses with high levels of cash flow visibility, resilience and 
pricing power, we have been underweight the sector and typically took exposure 
to energy only selectively in our Developing European assets. In our view, 
companies operating in the space are often reliant on unpredictable underlying 
commodity prices, tend to have a poor track record of capital allocation and 
can be challenged by the disruption from carbon transition and the need to 
re-invest in lower returning renewables projects. 
 
The higher exposure to industrials and technology also detracted, as higher 
multiple stocks were once again sold. A negative impact from the portfolio's 
overweight to health care was more than offset by accurate stock selection. 
 
The industrials sector was the largest detractor to relative returns during 
May. Whilst the stocks we own within the sector are unique in their set up and 
often unrelated to each other, most of them suffered from being higher multiple 
stocks. Sika, Kingspan and IMCD were amongst the largest detractors. Whilst we 
do not believe there are any issues from a fundamental perspective with these 
companies, and in fact many of these have reported strong earnings results in 
recent months, we acknowledge the risk of a continued derating of higher 
quality stocks on the back of concerns over an economic slowdown and hedge 
funds cutting exposures. 
 
The Company's position in Novo Nordisk weighed on portfolio returns. There was 
one piece of newsflow concerning pricing of a competitor drug, which was 
largely in line with our expectations. Operationally, the company is 
progressing very well having positively pre-released Q1 results and raised 
guidance in April. We continue to see this as a best in class, value creating 
and resilient business. The portfolio also suffered by not owning TotalEnergies 
- a large index constituent in the energy sector. 
 
On a positive note, the share price pressure on Straumann abated this month - 
aiding relative returns. The company announced a small acquisition which will 
expand their clear aligners footprint in select European markets and the CEO 
confirmed that they are not seeing any evidence of consumer weakness. Aside 
from these points, the company also released a very strong update at the end of 
April. While the market ignored the update on the day, shares eventually moved 
higher over the course of May. There had been some concern around the more 
discretionary nature of their dental aligners business in light of consumers 
pressured by inflation. However, overall sales grew by 27.2%, a big beat 
compared to the consensus estimate of 15.7%. 
 
Lastly, some of the index's large cap defensives sold off during the risk-on 
bounce later in the month. Not holding Roche, Nestle, L'Oreal and Richemont was 
positive in this context. 
 
At the end of the period, the Company had a higher allocation than the 
reference index towards technology, consumer discretionary, industrials and 

health care. The Company had an underweight allocation to financials, 
utilities, energy, consumer staples, telecoms, real estate and basic materials. 
 
Outlook 
 
So far 2022 has been challenging, with concerns over the economic implications 
of the Russia invasion of Ukraine, rising interest rates and continued supply 
chain disruptions weighing on equity returns. 
 
While we believe the environment remains supportive for corporate profits 
overall, there is potential for a slowdown as growth begins to normalise during 
the latter half of the year. Meanwhile the operating environment for companies 
continues to be complicated by supply chain and labour market disruptions. In 
addition, we expect some of the strong cyclical tailwinds, and indeed policy 
support seen in 2021, to fade over the course of 2022. Whilst rate markets and 
inflation expectations are likely to stay volatile, we do not expect policy in 
Europe to change significantly. 
 
We continue to stay close to our companies which allows us to understand the 
environment they are operating in. We expect greater dispersion between sector 
and stock outcomes and with that a need for greater selectivity. In our view 
this will favour well-managed, well-organised businesses with an element of 
pricing power and we believe that holding these businesses will benefit our 
shareholders over the medium to long term. 
 
28 June 2022 
 
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. 
 
 
 
END 
 
 

(END) Dow Jones Newswires

June 28, 2022 12:41 ET (16:41 GMT)