BlackRock Greater Europe Investment Trust “remains considerably ahead of its benchmark”


BlackRock Greater Europe Investment Trust plc (LON:BRGE) has two co-managers: Stefan Gries, since June 2017, covering developed European markets, and Sam Vecht, since the fund’s launch in September 2004, covering emerging European markets. The stock market rotation from growth to value stocks and the war in Ukraine have caused a setback for the trust in recent months. Nevertheless, BRGE remains considerably ahead of its benchmark over the last three, five and 10 years in both NAV and share price terms and it remains top of the AIC Europe sector peer group over these periods.

Edison Investment Research Analyst view

Developed markets typically make up c 90% of BRGE’s portfolio with c 10% in developing markets. However, the developing market exposure is now considerably lower following the write-down of the fund’s Russian securities due to the war in Ukraine. Gries says that he is regularly questioned by investors as to why he does not increase the trust’s cyclical exposure but is sticking to his successful approach of seeking high-quality companies that have the potential to generate significant value over the long term; his approach is to be ‘an investor in businesses, not a trader in shares’. BRGE’s portfolio is made up of companies across the market cap spectrum and the manager’s bottom-up approach has resulted in a fund with notable overweight exposures to the technology, industrial and consumer discretionary sectors, while the largest underweight exposure is financial stocks. The recent pullback in BRGE’s shares could represent a good entry point for long-term investors.

Currently trading close to NAV

Despite a step-back in relative performance and having had a modest exposure to Russian securities, BRGE regularly trades at a premium. The current 0.5% share price discount to cum-income NAV compares with a range of a 4.1% premium to a 3.7% discount over the last 12 months (average 1.6% premium). Over the last three, five and 10 years, the trust has traded at average discounts of 1.6%, 2.8% and 3.4% respectively.

Blackrock Greater Europe Investment Trust aims to provide capital growth, primarily through investment in a focused portfolio constructed from a combination of the securities of large, mid and small capitalisation European companies, together with some investment in the developing markets of Europe.

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