Portfolio Update

The information contained in this release was correct as at 31 August 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 August 2022 and unaudited.

Performance at month end with net income reinvested
 

	One Month	Three Months	One Year	Three Years	Launch (20 Sep 04)
Net asset value (undiluted)	-5.7%	-4.4%	-29.2%	23.7%	546.6%
Share price	-2.6%	-1.5%	-33.4%	23.2%	526.5%
FTSE World Europe ex UK	-2.2%	-4.5%	-11.5%	13.5%	318.4%

Sources: BlackRock and Datastream
 

At month end

Net asset value (capital only):	469.96p
Net asset value (including income):	475.72p
Share price:	456.00p
Discount to NAV (including income):	4.2%
Net gearing:	0.1%
Net yield1:	1.4%
Total assets (including income):	£483.8m
Ordinary shares in issue2:	101,698,853
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 ended 31 August 2022.
2  Excluding 16,230,085 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 (%) Industrials 21.5 Health Care 21.1 Consumer Discretionary 19.2 Technology 15.5 Financials 11.6 Consumer Staples 6.4 Basic Materials 3.3 Net Current Assets 1.4 ----- 100.0 =====

Country Analysis Total Assets (%) Denmark 20.0 Switzerland 17.0 Netherlands 16.9 France 14.7 United Kingdom 7.0 Sweden 6.3 Italy 6.1 Belgium 2.6 Spain 2.4 Greece 1.7 Poland 1.6 Germany 1.2 Ireland 1.1 Net Current Assets 1.4 ----- 100.0 =====

Top 10 holdings	Country	Fund%
Novo Nordisk	Denmark	8.4
ASML	Netherlands	7.4
LVMH Moët Hennessy	France	7.1
RELX	United Kingdom	6.0
Lonza Group	Switzerland	5.4
DSV Panalpina	Denmark	5.0
Royal Unibrew	Denmark	3.9
Sika	Switzerland	3.6
Hermès International	France	3.6
IMCD	Netherlands	3.3

Commenting on the markets, Stefan Gries, representing the Investment Manager noted:

During the month, the Company’s NAV fell by 5.7% and the share price declined by 2.6%. For reference, the FTSE World Europe ex UK Index returned -2.2% during the period.

European ex UK equities slid during the month. Following a strong July, August proved that markets remain volatile and continue to lack direction.

Global risk assets were down sharply around the Federal Reserve’s (the Fed) annual central bankers’ meeting at Jackson Hole. Markets had hoped that Fed Chair Jerome Powell might indicate a pivot, however there were no signs to back off the Fed’s hiking intention.

Recession fears further created volatility during the month as inflation numbers in most parts of the world remained high, whilst uncertainty around the future gas supply to Europe also continued to weigh on sentiment. Yet, we see some signs for cautious optimism as European countries are currently filling their gas storages for the winter quicker than expected by aggressively buying any capacity (even though this comes at a high price), reducing demand, switching from gas to coal/oil and increasingly importing liquefied natural gas (LNG). Most governments are also working on relief packages to support consumers with rising energy bills.

During the month, solely the energy and financials sectors delivered positive returns in the market, whilst all other sectors fell in absolute terms. In particular, real estate, technology and industrials were the weakest performers.

The Company underperformed its reference index during the month, driven by both stock selection and sector allocation.

In sector terms, the Company’s lower weight to energy was negative for performance, as was an underweight to financials. The portfolio’s higher exposure to technology also hurt performance, as more cyclical assets fell due to the risk-off environment during the month. Not owning any shares in real estate was positive for relative returns. In particular, avoiding Vonovia aided returns.

The largest negative contribution to relative returns came from shares that were caught up in the derating of high quality, cyclical businesses, whilst in many cases these companies actually delivered strong results. Within materials, chemicals distribution business IMCD fell despite having delivered strong results at the beginning of the month. The company reported 58% EBITA growth for the first half of 2022 as demand and pricing remained strong. Similarly, DSV suffered under global macroeconomic uncertainties and worries around a normalisation in the logistics space. However, the stock had been the top performer in the previous month on the back of stellar H1 results.

Our holding in ASML also detracted from performance. Again, shares fell in the risk-off market and despite limited stock specific news. In fact, the company had delivered solid results as we discussed in our July report.

The Company’s positioning within health care delivered a mixed outcome during the month. Lonza managed to confuse the market with an H1 update that indicated a cancellation fee collected in H1 would mean H2 would be weaker without this benefit repeating. However, more detail from talking to the company reassured us this is a normal part of their business, written into every contract and the capacity has already been refilled to another customer.

Elsewhere, dental implant maker Straumann detracted on concerns over a slowing economic environment, even though underlying business trends remain favourable.

However, not owning Sanofi partially offset some of the relative losses in the health care sector. Sanofi came under pressure as several pharma companies were named in US personal injury suits on the basis of having failed to warn about cancer risks regarding the drug Zantac.

On the positive side, our position in National Bank of Greece was the top performer over the month. The sector outperformed the falling market and we believe banks can benefit from rising interest rates while, at this stage, we do not expect a severe loss cycle in a global downturn.

Luxury groups LVMH and Hermès also contributed positively, continuing to show resilience following very strong results in July.

At the end of the period, the Company had a higher allocation than the reference index towards technology, health care, industrials and consumer discretionary. The Company had an underweight allocation to energy, utilities, financials, consumer staples, telecoms, materials and real estate.

Outlook

So far 2022 has been challenging, with concerns over the economic implications of the Russian invasion of Ukraine, rising interest rates and continued supply chain disruptions weighing on equity returns.

We are incrementally more cautious on the environment but see opportunities for attractive returns in select areas. Large amounts of fiscal spending via the Recovery Fund, Green Deal and the REPowerEU plan in Europe can drive demand for years to come, for example in areas such as infrastructure, automation, the shift to electric vehicles, digitalisation, renewables or the refurbishment of building stock. We believe the portfolio is well aligned to many of these spending streams.

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.

14 September 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.