Building on the record of outperformance

BlackRock Greater Europe Investment Trust 15 October 2018 Review
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BlackRock Greater Europe Investment Trust

Building on the record of outperformance

Investment trusts

15 October 2018

Price

326.5p

Market cap

£282m

AUM

£297m

NAV*

337.0p

Discount to NAV

3.1%

NAV**

341.5p

Discount to NAV

4.4%

*Excluding income. **Including income. As at 11 October 2018.

Yield

1.7%

Ordinary shares in issue

86.5m

Code

BRGE

Primary exchange

LSE

AIC sector

Europe

Reference index

FTSE World Europe ex-UK

Share price/discount performance

Three-year performance vs index

52-week high/low

369.0p

308.0p

389.4p

326.4p

**Including income.

Gearing

Net*

1.9%

*As at 31 August 2018.

Analysts

Mel Jenner

+44 (0)20 3077 5720

Sarah Godfrey

+44 (0)20 3681 2519

BlackRock Greater Europe Investment Trust is a research client of Edison Investment Research Limited

BlackRock Greater Europe Investment Trust (BRGE) has two co-managers: Stefan Gries focuses on developed markets in Europe (the large majority of the portfolio), while Sam Vecht focuses on emerging markets. Gries believes that the investment backdrop remains relatively robust, but stresses the importance of remaining selective. He seeks quality companies that can be held for the long term, where their earnings and cash flow potential is not reflected in their current share prices. Since Gries became co-manager in June 2017, BRGE has outperformed the FTSE World Europe ex-UK index by c 12pp. He continues to find attractive investment opportunities, and comments that the broad-based sell-off in emerging markets means there is potential for a higher emerging Europe allocation in the trust’s portfolio in coming months.

12 months ending

Share price
(%)

NAV
(%)

FTSE World Europe ex-UK (%)

FTSE All-Share
(%)

FTSE World
(%)

30/09/14

0.2

1.8

6.2

6.1

11.9

30/09/15

7.1

5.8

(1.2)

(2.3)

0.8

30/09/16

19.7

21.1

21.1

16.8

31.2

30/09/17

20.8

20.5

22.7

11.9

15.4

30/09/18

11.0

11.6

2.0

5.9

14.2

Source: Thomson Datastream. Note: All % on a total return basis in pounds sterling.

Investment strategy: Diligent fundamental research

The co-managers are able to draw on the deep resources of BlackRock’s European and emerging market investment teams to construct a concentrated portfolio of c 35-45 European equities from an investible universe of c 2,000 companies. Stocks are selected on a bottom-up basis following diligent fundamental research, seeking firms with potential for positive cash flow and earnings estimate revisions. The managers stress the importance of continuing to evaluate portfolio companies to ensure the investment case remains robust.

Market outlook: Selectivity may be rewarded

In recent quarters, equities have been supported by robust corporate earnings growth, along with a revaluation of share prices. However, there are indications that economic activity is weakening; for example, within Europe, purchasing manager indices and sentiment indicators have started to decline. In addition, above-average valuation multiples and a return to more normal levels of stock market volatility, compared with the benign environment in 2017, mean investors may be better served by adopting a more selective, valuation-aware approach.

Valuation: Trading within a narrow range

BRGE’s current 4.4% share price discount to cum-income NAV is broadly in line with the averages of the last one, three, five and 10 years (range of 4.0% to 4.6%). The board actively manages the discount via discretionary six-monthly tender offers (next due at the end of November 2018), along with periodic share repurchases. The trust has a progressive distribution policy, and the regular dividend has increased each year since the fund was launched in 2004. Based on its current share price, BRGE offers a dividend yield of 1.7%.

Exhibit 1: Trust at a glance

Investment objective and fund background

Recent developments

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, together with some investments in the developing markets of Europe. It aims to achieve a net asset value total return in excess of the FTSE World Europe ex-UK index (in sterling terms).

17 September 2018: Announcement of tender offer for up to 20% of ordinary shares in issue (excluding treasury shares).

1 June 2018: Results of tender offer – 2.3m ordinary shares (2.6% of shares in issue, excluding treasury shares) tendered at a price of 351.43p.

25 April 2018: Six-month results ending 28 February 2018. NAV TR +0.8% versus reference index TR -2.1%. Share price TR +1.4%.

Forthcoming

Capital structure

Fund details

AGM

November 2018

Ongoing charges

1.10%

Group

BlackRock Investment Mgmt (UK)

Final results

October 2018

Net gearing

1.9%

Managers

Stefan Gries, Sam Vecht

Year end

31 August

Annual mgmt fee

0.85%

Address

12 Throgmorton Avenue,
London, EC2N 2DL

Dividend paid

May, December

Performance fee

None

Launch date

20 September 2004

Trust life

Indefinite

Phone

+44 (0) 20 7743 3000

Continuation vote

None

Loan facilities

£20m overdraft facility

Website

blackrock.co.uk/brge

Dividend policy and history (financial years)

Share buyback policy and history (financial years)

BRGE pays two dividends a year in May and December. Ordinary dividends have increased every year since trust launch.

To help manage the discount, the board has the authority (alongside normal buyback powers) to implement a twice-yearly tender for up to 20% of shares outstanding, renewed annually. The 2012 allotments include the acquisition of Charter European Trust.

Shareholder base (as at 31 August 2018)

Portfolio exposure by geography (as at 31 August 2018)

Top 10 holdings (as at 31 August 2018)

Portfolio weight %

Company

Country

Sector

31 August 2018

31 August 2017*

Lonza Group

Switzerland

Pharmaceuticals & biotechnology

5.9

4.1

Novo Nordisk

Denmark

Pharmaceuticals & biotechnology

4.7

3.4

Safran

France

Aerospace & defence

4.7

N/A

SAP

Germany

Software & computer services

4.6

4.0

Sika

Switzerland

Construction & materials

4.6

N/A

Unilever

Netherlands

Personal goods

3.7

4.4

Fresenius Medical Care

Germany

Healthcare equipment & services

3.6

N/A

Thales

France

Aerospace & defence

3.3

N/A

Hexagon

Sweden

Software & computer services

3.2

N/A

DSV

Denmark

Industrial transportation

3.0

N/A

Top 10

41.3

38.8

Source: BlackRock Greater Europe Investment Trust, Edison Investment Research, Bloomberg, Morningstar. Note: *N/A where not in August 2017 top 10.

Market outlook: Reasons to be selective

While European equities have delivered above average sterling-based returns since early 2016 (helped by sterling weakness), over the last five years Europe has underperformed the global market (Exhibit 2, LHS). Share prices have been supported by corporate earnings growth along with revaluation, due to ample available liquidity and low yields on competing asset classes such as developed market government bonds and cash. As a result, equity valuations are looking somewhat stretched versus history. Based on forward P/E multiples, European companies – while not as expensive as US equities – are trading at a 4% premium to their 10-year average.

In terms of economic growth, risks are arguably to the downside. In Europe, purchasing manager indices and economic sentiment indicators have started to decline, and there is uncertainty surrounding the ongoing Brexit negotiations. It is also important to note that more than half the revenues of European companies are generated outside the region, so firms are not immune to broader macro events such as the current dispute between the US and China. Taking the current macroeconomic environment and above-average equity valuations into account, investors may benefit from a more selective approach, seeking companies with sustainable growth characteristics, which are trading on reasonable valuations.

Exhibit 2: Market performance and valuation

Performance of FTSE World Europe ex-UK index over five years (£)

Valuation multiples of Datastream indices

 

Last

High

Low

10-year
average

Last as % of
average

Forward P/E (x)

Europe ex-UK

12.5

15.6

7.4

12.0

104

UK

12.1

15.4

7.4

12.4

97

US

16.2

18.9

9.4

14.9

108

World

13.2

16.3

8.8

13.3

99

Price-to-book (x)

Europe ex-UK

1.5

1.8

0.9

1.4

106

UK

1.5

2.1

1.2

1.7

89

US

3.0

3.2

1.3

2.3

130

World

2.0

2.2

1.1

1.7

116

Source: Thomson Datastream, Edison Investment Research. Note: Valuation data as at 12 October 2018.

Fund profile: Broad European equity exposure

BRGE was launched in September 2004 and is co-managed by Stefan Gries (since June 2017 – focused on developed European markets) and Sam Vecht (since launch – focused on emerging markets). They both employ a bottom-up approach to stock selection, aiming to generate long-term capital growth. BRGE’s portfolio typically has c 35-45 holdings, across the market capitalisation spectrum, although the majority of positions are in companies larger than €10bn.

Investment guidelines include a maximum 25% of the risk allocation to be held in emerging Europe (currently less than 10%) and a limit of 5% in unquoted investments (together, these two exposures may not exceed 25%). Up to 15pp of emerging European exposure may be via funds, and direct investment in Russia is limited to 10% of total assets. Up to 20% of the portfolio may be held in bonds, although none are currently held. Derivatives are permitted for efficient portfolio management. The trust may gear up to 15% of NAV (at the time of drawdown) – net gearing was 1.9% at end-August 2018. BRGE is not benchmarked against a particular index, but the FTSE World Europe ex-UK index is used as a reference.

The fund managers: Stefan Gries and Sam Vecht

The manager’s view: Benefits of selective approach

We met with Gries and discussed the current macroeconomic environment. He stressed that given BRGE’s bottom-up investment approach, his views on the macro background are formed on the basis of information that he and his team glean from meeting with, and analysing, European companies. His view is that although the consensus growth outlook has moderated compared with the beginning of this year, the eurozone economy is still expanding at a higher pace than the historical average.

In this environment, Gries says, it is very important to remain selective, as there are some areas of the market where earnings growth has moderated and estimate revisions are negative, such as autos and banks. The manager comments that earlier this year, investors had positive expectations regarding the prospects for European banks, based on a synchronised global economic expansion, which would lead to robust loan growth and higher interest rates in response to an uptick in inflation. Gries took a more conservative approach, given his belief that a lot of good news was already priced into bank stocks and that he did not expect positive earnings and cash flow estimate revisions due to higher inflation/interest rates. As a result, BRGE has a large underweight exposure to banks compared with the reference index, which has proved to be the correct decision, as the sector has significantly underperformed the broader European stock market so far in 2018. The manager says that this positioning is an example of BRGE’s diligent stock selection approach and that he ‘does not buy in to macro narratives’. He says he would have been unable to sit in front of the trust’s board and say with confidence that the banks were mispriced, and would be able to surprise positively in terms of earnings and cash flow generation.

While politics in Europe may periodically hit the headlines, Gries says that unless there is a broad-based change in the growth outlook, a change in the tax regime or a different regulatory environment, there tends to be very little effect at the corporate level from political news. However, negative headlines do have an impact on asset allocation. This is evident so far this year in negative fund flows from Europe, which may also be a result of moderating global growth, given that c 60% of the revenues of European companies are generated outside the region. As a result, due to a lack of appetite for European equities, despite better corporate earnings growth, the manager says that the stock market has failed to make much headway, in local currency terms, over the last three years.

Gries and his team seek companies that operate in niche businesses with structural end-market demand, which offers potential pricing power. These tend to be Europe-listed companies with attractive international businesses, which have favourable earnings and cash flow growth prospects over the next one to three years. Overall, the manager believes that the growth environment is favourable; while Europe is slowing somewhat, data from the US remains strong and the Chinese government is managing its economy to ensure that it continues to grow. However, there are risks to global trade as a result of the US’s protectionist policies. Gries says that until recently, volume data from freight forwarding companies have remained robust. He will be carefully monitoring the commentary from these companies in their Q318 earnings reports to see if a recent slowdown in rolling three-month volumes was just a blip, or the start of a longer-term negative trend.

Asset allocation

Investment process: In-depth, bottom-up research

Co-managers Gries (developed European markets) and Vecht (emerging markets) are able to draw on the broad resources of BlackRock’s investment teams to construct a concentrated portfolio of c 35-45 European equities, which are selected from an investible universe of c 2,000 companies. Developed market equities make up the lion’s share of BRGE’s exposure. Gries invests on a bottom-up basis, based on four primary criteria:

Businesses with a unique product, brand or contract, which provides a competitive moat and allows a company to generate attractive returns.

A quality management team with a clearly defined strategy, and a strong track record of creating value.

High and predictable returns on capital and high free cash flow conversion.

Adequate resources to invest in operations that will generate high and sustainable returns.

The manager and his team look for companies where these characteristics are not reflected in their current share prices, and there is potential for positive cash flow and earnings estimate revisions. The team works on a collaborative basis, undertaking thorough fundamental research, and company meetings are a key part of the investment process. A research template, which includes financial modelling, is constructed for potential investee companies.

However, Gries says that it is important to ‘keep the plate spinning’ – the research templates and company meetings are viewed as just the start of the journey, and the team must continue revisiting the same ideas to garner more information. He acknowledges that sometimes the investment case proves to be less strong than originally envisaged. The manager cites the former BRGE holding in Switzerland-based luxury goods company Richemont, where he became concerned about a series of senior management changes, underperformance in some of its key brands and the questionable re-acquisition at a high valuation of online shopping portal Net-a-Porter, following its merger with Yoox. Other reasons for a position to be sold are if the investment case has played out, meaning little further share price appreciation is expected, or if a superior investment opportunity is identified elsewhere. In terms of oversight, BlackRock employs a proprietary risk management system, both to mitigate risk, and help to maximise shareholder returns.

Following the appointment of Gries as co-manager in June 2017, the investment process has essentially stayed the same. However, he has tweaked the approach, which judging from the trust’s performance since then (see pages 7 and 8) has proved successful. Gries has strengthened the investment philosophy; moved to higher-conviction positions and increased the portfolio’s active share (a measure of how a portfolio deviates from an index, with 0% representing full index replication and 100% representing no commonality); delivered excess returns from the European investment team more effectively; and opportunistically used the investment trust toolkit, which includes gearing.

Current portfolio positioning

At end-August 2018, BRGE’s top 10 positions made up 41.3% of the portfolio, which was an increase in concentration compared with 38.8% a year earlier; four positions were common to both periods. In terms of sector exposure (Exhibit 3), over the last 12 months, the largest increases were in industrials (+5.6pp) and healthcare (+4.8pp), with the largest decrease (-6.9pp) in consumer services. The unconstrained investment approach is illustrated by the large divergences compared with the reference index, such as the more than double weight in industrials and a half weighting in the financial sector, which makes up more than a fifth of the FTSE World Europe ex-UK index.

Gries highlights the holding in ASML as an example of a company with a strong brand and pricing power. It has an 86% global market share in the lithography semiconductor manufacturing equipment market, serving the leading chip manufacturers such as Intel, Samsung and Taiwan Semiconductor Manufacturing. ASML is rolling out its EUV platform, which enables semiconductor manufacturers to reduce chip size and increase memory capacity. It is also developing a successor product, and two large clients have paid €200m each for the option to test a 2021/22 prototype that will be rolled out in 2023/24. Gries believes that no other company would be able to charge this amount of money for a prototype with a five- to six-year production lead time.

Exhibit 3: Portfolio sector exposure vs reference index (% unless stated)

Portfolio end-August 2018

Portfolio end-August 2017

Change
(pp)

Index weight

Active weight vs index (pp)

Trust weight/
index weight (x)

Industrials

35.0

29.4

5.6

15.2

19.9

2.3

Healthcare

21.0

16.1

4.8

13.6

7.4

1.5

Consumer goods

11.5

12.9

(1.5)

18.6

(7.1)

0.6

Financials

10.1

9.8

0.3

21.0

(11.0)

0.5

Technology

9.2

9.2

(0.0)

6.4

2.8

1.4

Consumer services

6.2

13.0

(6.9)

4.7

1.5

1.3

Basic materials

3.6

4.4

(0.8)

6.8

(3.2)

0.5

Telecommunications

1.8

0.0

1.8

3.1

(1.3)

0.6

Oil & gas

1.7

5.0

(3.3)

6.6

(4.9)

0.3

Utilities

0.0

0.0

0.0

4.0

(4.0)

0.0

Total

100.0

100.0

100.0

Source: BlackRock Greater Europe Investment Trust, FTSE Russell, Edison Investment Research. Note: Rebased for net current assets/liabilities.

The manager highlights the importance of patience and waiting for opportunities. A recent example is the new holding in luxury auto manufacturer Ferrari. The team had been monitoring the company for some time, and took the opportunity to initiate a position when its stock price fell in July 2018 following the death of its well-respected CEO Sergio Marchionne. Gries says that mass-market auto manufacturers only generate c 5-6% EBIT margins, due to their lack of pricing power. However, Ferrari has 23% EBIT margins, which he envisages can expand over the next two to three years. Earnings visibility is high as the company has a two-year customer waiting list. It has established strong brand loyalty, with c 60% of all new Ferraris purchased by existing owners, of whom more than 40% have more than one of the company’s vehicles. Historically, Ferrari has not put through regular price increases, but this is changing and customers are not price-sensitive. There is also high demand for its limited editions; 500 supercars are sold by invitation at price tags in excess of €1.5m, despite having similar underlying technology to the regular models. The company recently hosted a capital markets day, which was well-received by investors, and is working to monetise its brand outside of autos. The manager believes that Ferrari has the potential to be a multi-year holding in BRGE’s portfolio.

Another new holding in the portfolio is FinecoBank, an Italian multi-channel bank offering banking, credit, trading and investment services from a single account. Its transaction and consulting services and platforms are developed in-house using proprietary technology. This innovative approach means that the bank is taking share from the more traditional banks, which offer lower-quality products and are encumbered by their legacy IT systems. Gries initiated the position in FinecoBank during a period of share price weakness due to negative political headlines in Italy.

A couple of relatively recent disposals in the fund are legacy positions (dating back to the prior manager). Renault has not been delivering strong results, and Gries had question marks over the quality of the management team and the company’s return profile and growth outlook. Bayer has experienced weakness in some of its core businesses, such as consumer and agricultural products, and the manager is concerned about the ramifications of the large Monsanto acquisition. In both cases, Gries believes that there are better uses for BRGE’s capital elsewhere.

Emerging Europe is currently less than 10% of BRGE’s exposure, which compares to a historical range of c 5-15%. Profits were taken in Russian energy companies Novatek and Rosneft, as their share prices had performed well and their valuations normalised. The position in Israeli generic drug manufacturer Teva Pharmaceutical Industries was sold. It was purchased following a significant pullback in the stock, and profits were taken following a big bounce in the share price in a short space of time. The manager says that this is an example of the potential share price volatility in emerging markets. BRGE once again has a position in Russian bank Sberbank, whose share price retreated following headlines about US sanctions. Gries and Vecht cite the company’s strong fundamental outlook; it has a 50% share of the Russian mortgage market, in a country where home ownership is low and housing is becoming more affordable due to lower interest rates. Sberbank generates a much higher return on equity than the traditional European banks, and is trading at an attractive valuation – a forward P/E multiple of c 5x, while offering a c 6% dividend yield. While Vecht and his emerging markets team have considered the impact of US sanctions, they believe that the effect on Sberbank’s operations will be limited. The position was built up throughout the summer, and the company’s share price is now starting to recover.

Performance: Strong in absolute and relative terms

Over the last 12 months, BRGE’s NAV and share price total returns of 11.6% and 11.0% respectively are meaningfully ahead of the reference index’s 2.0% total return. The manager is particularly pleased that the majority of this outperformance is due to stock selection rather than sector allocation, as he says it validates the trust’s robust investment process. During the period, the best contributors to performance included speciality chemical company Lonza, aeroplane engine manufacturer Safran, and luxury goods firm Kering. Gries says that in an environment where predictable growth is relatively scarce, these companies have options for growth, and have over-delivered on earnings and cash flow generation. He says that the corporate growth profile in Europe has changed; in 2000, around half of the listed companies were able to grow organically at c 7-8% pa, but this figure is now down to about one in nine.

The position in Danske Bank, which is facing allegations of money laundering through its Estonian operation, has detracted from returns. Gries says that the company’s underlying business is strong, its balance sheet is robust enough to support a fine and, at the current share price, the company is looking particularly interesting. Another detractor was Telenet Group, which was underperforming the broader stock market. The manager and his team undertook further research on the company and concluded that the Belgium telecom sector has changed, and is now more competitive. As a result, the Telenet position was sold.

Exhibit 4: Investment trust performance to 30 September 2018

Price, NAV and index total return performance, one-year rebased

Price, NAV and index total return performance (%)

Source: Thomson Datastream, Edison Investment Research. Note: Three-, five- and 10-year performance figures annualised.

Exhibit 5: Share price and NAV total return performance, relative to indices (%)

 

One month

Three months

Six months

One year

Three years

Five years

10 years

Price relative to FTSE World Europe ex-UK

(0.8)

(0.1)

6.3

8.8

5.9

8.3

41.8

NAV relative to FTSE World Europe ex-UK

(0.2)

2.0

7.1

9.4

7.4

10.2

35.7

Price relative to FTSE All-Share

(1.9)

3.9

4.6

4.8

15.9

20.1

39.7

NAV relative to FTSE All-Share

(1.3)

6.1

5.4

5.4

17.6

22.2

33.7

Price relative to FTSE World

(1.6)

(3.0)

(0.4)

(2.8)

(7.1)

(11.7)

3.5

NAV relative to FTSE World

(1.0)

(0.9)

0.3

(2.3)

(5.8)

(10.1)

(0.9)

Source: Thomson Datastream, Edison Investment Research. Note: Data to end-September 2018. Geometric calculation.

BRGE’s relative performance is shown in Exhibit 5. It has outperformed the reference index over one, three, five and 10 years, in both NAV and share price terms. It is also interesting to note the trust’s superior performance compared to the UK stock market, outperforming over all of the periods shown, with the exception of the last month.

Exhibit 6 shows BRGE’s relative performance over the last three years. It clearly shows how well the trust has performed since Gries took over as lead manager in June 2017. Since then, BRGE has outperformed the reference index by c 12pp.

Exhibit 6: NAV total return performance relative to reference index over three years

Source: Thomson Datastream, Edison Investment Research

Discount: Trading close to historical averages

Historically, BRGE’s shares trade in a pretty narrow band versus its NAV, and its current 4.4% share price discount to cum-income NAV is broadly in line with the averages of the last one, three, five and 10 years (range of 4.0% to 4.6%).

The board actively manages the discount via periodic repurchases and discretionary semi-annual tender offers for up to 20% of shares outstanding. Results of the last tender offer were released on 1 June 2018 – 2.3m ordinary shares were tendered (2.6% of shares in issue, excluding treasury shares) at 351.43p (the prevailing cum-income NAV minus 2% to cover costs). The board has announced that the calculation date for the next tender offer will be 30 November 2018.

Exhibit 7: Share price premium/discount to NAV (including income) over three years (%)

Source: Thomson Datastream, Edison Investment Research

Capital structure and fees

BRGE is a conventional investment trust, with one class of share, following the final conversion of subscription shares in FY16. There are 86.5m ordinary shares in issue, and a further 23.9m are held in treasury. The trust has a £20m overdraft facility and may gear up to a maximum 15% of NAV at the time of drawdown. At end-August 2018, net gearing was 1.9%, which compares to a historical range of c 15% geared to c 10% net cash.

Since 1 September 2015, BlackRock has been paid an annual management fee of 0.85% of NAV, and no performance fee is payable. In FY17, ongoing charges were 1.10%, which was 3bp higher than 1.07% in FY16.

Dividend policy and record

BRGE historically paid dividends once a year; however, since 2014, they have been paid twice, in May and December. The board adopts a progressive distribution policy, and the regular dividend has increased every year since the trust was launched in 2004. At end-H118, BRGE had £8.2m of distributable reserves, which is more than 1x the last annual distribution and may be used to smooth dividend payments in years of lower revenue generation. Based on its current share price, BRGE offers a 1.7% dividend yield.

Peer group comparison

BRGE is a member of the AIC Europe sector, a relatively small peer group of eight funds. Its NAV total returns are above average over one and three years, ranking third and second, respectively, while lagging over five and 10 years. BRGE’s discount is narrower than average, its level of gearing is modestly lower than the peer group average, and it has a below-average dividend yield. While the trust has the highest ongoing charge in the peer group, the range for the whole sector (with the exception of European Investment Trust) is narrow, and in common with four other peers, BRGE does not charge a performance fee.

Exhibit 8: AIC Europe peer group as at 12 October 2018*

% unless stated

Market cap (£m)

NAV TR
1 year

NAV TR
3 year

NAV TR
5 year

NAV TR
10 year

Discount (cum-fair)

Ongoing charge

Perf.
fee

Net gearing

Dividend yield (%)

BlackRock Greater Europe

282.3

(2.4)

42.5

55.7

261.6

(4.4)

1.1

No

102

1.7

European Investment Trust

341.6

(11.5)

25.6

28.9

142.0

(10.9)

0.6

No

100

2.7

Fidelity European Values

896.5

(1.4)

42.4

59.2

210.6

(9.2)

0.9

No

113

2.0

Henderson European Focus Trust

245.1

(9.8)

32.3

61.0

265.2

(8.5)

0.9

Yes

100

2.6

Henderson EuroTrust

225.6

(5.6)

40.7

61.4

251.4

(8.2)

0.9

Yes

100

2.9

JPMorgan European Growth Pool

197.3

(10.9)

31.1

47.5

205.6

(11.8)

1.0

No

112

2.5

JPMorgan European Income Pool

152.0

(7.2)

38.6

59.4

256.6

(9.5)

1.0

No

107

4.2

Jupiter European Opportunities

858.6

3.5

45.8

88.4

550.7

0.3

0.9

Yes

103

0.8

Average

399.9

(5.7)

37.4

57.7

268.0

(7.8)

0.9

105

2.4

BRGE rank in sector (8 trusts)

4

3

2

6

3

2

1

5

7

Source: Morningstar, Edison Investment Research. Note: *Performance to 11 October 2018. TR = total return. Net gearing is total assets less cash and equivalents as a percentage of net assets.

The board

There are four independent, non-executive directors on BRGE’s board. The chairman is Eric Sanderson, who was appointed as a director in April 2013 and assumed his current role in November 2016. The other three directors are Davina Curling (appointed in December 2011), Peter Baxter (April 2015) and Paola Subacchi (July 2017).

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority (Financial Conduct Authority). Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by BlackRock Greater Europe Investment Trust and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable; however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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