BlackRock Greater Europe Investment Trust (LSE: BRGE)

Last close As at 18/05/2024

GBP6.40

1.00 (0.16%)

Market capitalisation

GBP641m

BlackRock Greater Europe Investment Trust’s objective is to achieve capital growth, primarily through investment in a focused portfolio of large-, mid- and small-cap European companies. It aims to achieve a net asset value total return in excess of a broad index of European ex-UK equities (in sterling terms).

Equity Proposition

Four things investors need to know

  1. The trust focuses on capital growth from European ex-UK stocks.

BlackRock Greater Europe Investment Trust (BRGE) is managed by Stefan Gries, since June 2017, and Alexandra Dangoor, who was appointed as co-manager in September 2023. They aim to generate capital growth from a portfolio of European (ex-UK) companies with around 80% of the fund held in large-cap companies and the balance in small- and mid-sized businesses. When required, the managers can draw on the deep resources of the Blackrock Fundamental European Equity team, which has 22 highly experienced investment professionals and assets under management of around £24bn.

  1. BRGE is a high-conviction, low-turnover fund.

The trust has a broad remit as Gries and Dangoor can invest in both developed and emerging European markets (up to 25% of the fund) when attractive opportunities are identified. Stocks are selected on a bottom-up basis following thorough fundamental research on both companies and the industries in which they operate. The managers believe it is important to understand the factors that influence a company’s share price and what the stock market is anticipating or may be missing. Because they seek the best businesses that are based in Europe, Gries and Dangoor suggest that investors do not have to have a positive view on the economy to consider BRGE.

There are four primary investment criteria when assessing a potential addition to the fund: 1) a unique aspect – such as a product, brand or contract structure – that provides the potential for consistent attractive returns; 2) options to deploy cash in areas of high and sustainable returns; 3) a high and predictable return on capital and strong free cash flow conversion; and 4) a quality management team with a clearly defined strategy and a strong track record of value creation.

Gearing of up to 15% of NAV is permitted, with the typical range being net gearing of 5–8%. The managers do not try to time stock market moves; BRGE’s level of gearing is driven by the availability of opportunities to add to the fund’s existing holdings or to introduce new names into the portfolio.

The managers take a long-term approach, avoiding short-term stock market noise; they consider themselves investors in businesses, rather than traders in shares. Understandably, portfolio turnover is low – generally less than 20% a year – which implies a greater than five-year holding period.

  1. BRGE has a relatively concentrated portfolio of high-quality European equities.

The trust’s portfolio typically has 35–45 positions, with the top 10 holdings making up around half of the fund. Areas represented in the portfolio include industrial companies that are benefiting from their customers’ higher capex spend, life science businesses, luxury goods companies and semiconductor businesses. There are no constraints on sector exposure and Gries and Dangoor are benchmark agnostic. This is illustrated by four of the 11 market sectors (energy, real estate, telecoms and utilities) not being represented in the portfolio as companies in these sectors generally do not meet their growth and quality investment criteria. The managers’ strategy has been successful as BRGE has outperformed the Europe ex-UK market over the long term and its NAV total returns also rank highly versus its six peers in the AIC Europe sector.

  1. BRGE has a progressive dividend policy.

The trust makes semi-annual payments, and the annual dividend has grown every year since the company was launched in 2004, although the investment objective is capital growth rather than income.

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Equity Analyst

Melanie Jenner

Mel Jenner

Director, Investment Trusts

Share Price Performance

Price Performance
% 1M 3M 12M
Actual 3.6 3.7 17.4
Relative (4.0) (5.1) 8.0
52 week high/low 650.0p/466.0p

Overview

BlackRock Greater Europe Investment Trust (BRGE) has two co-managers: Stefan Gries (since June 2017) and newly appointed Alexandra Dangoor (since September 2023). They highlight that Europe is very attractively valued and as the managers seek the best businesses that are based in Europe, investors do not need to have a positive view on the European economy to consider BRGE. The trust has outperformed the Europe ex-UK market over the last one, five and 10 years, and its NAV total returns also rank first compared with those of the other three funds with a growth mandate in the AIC Europe sector over these periods.

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