BlackRock Greater Europe Investment Trust plc

About this investment trust

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The Company 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.

Why choose it?

Europe is a rich source of innovation and dynamic capitalism. Active management can uncover its most exciting companies. The Trust invests in global brand leaders, plus smaller companies focused on niche, high growth areas. The Trust looks for high quality, well-capitalised companies with strong management teams that can create real value for shareholders over time. 

Suited to…

This Trust is designed for investors looking to invest in a selection of Europe’s highest quality, fastest-growing companies, irrespective of their size and geography. They must be willing to take on some additional risk to grow their capital over the long term.

Citywire: As at 16 November 2021.
Investment Week: As at 18 November 2021.
Kepler Rating: As at 1 January 2022.

What are the risks?

• Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
• Overseas investment will be affected by movements in currency exchange rates.
• Emerging market investments are usually associated with higher investment risk than developed market investments. Therefore the value of these investments may be unpredictable and subject to greater variation.
• Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.
• The Trust’s investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Trust may not be able to realise the investment at the latest market price or at a price considered fair.

Useful information

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Fees & Charges

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ESG Integration

The fund noted above does not commit to sustainable criteria nor does it have a sustainable investment objective.

BlackRock considers many investment risks in our processes. In order to seek the best risk-adjusted returns for our clients, we manage material risks and opportunities that could impact portfolios, including financially material Environmental, Social and/or Governance (ESG) data or information, where available. See our Firm Wide ESG Integration Statement for more information on this approach and fund documentation for how these material risks are considered within this product, where applicable.

Fund manager commentary

31 March 2025

Comments from the portfolio managers

Please note that the commentary below includes historic information in respect of performance data in respect of portfolio investments, index performance data and the Company’s NAV performance.

The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results.

During the month, the Company’s NAV declined by 10.0% and the share price fell by 9.7%. For reference, the FTSE World Europe ex UK Index returned -2.6% during the period.

In March, Europe ex UK markets experienced a decline, marked by severe volatility, ongoing narrow market leadership and significant changes on both sides of the Atlantic.

The better backdrop for cyclicals peaked in mid-February and, since then, defensives have generally outperformed. Value has outperformed Growth by a meaningful amount.

Concerns around the US economy, particularly tariffs and federal spending cuts, significantly influenced market performance, leading to a more pessimistic outlook for US consumers, with confidence hitting a 12-year low (US Conference Board Consumer Confidence Index). This dampened consumer outlook was evident in data in more recent weeks and flagged by companies during the month. However, it remains to be seen as to whether this has been influenced by the more volatile political backdrop.

Conversely, Germany's substantial stimulus announcements, including a spending package of at least EUR 1 trillion aimed at defence and infrastructure, provided a more positive outlook for Europe.

The month saw limited major company releases, leaving the market largely driven by macroeconomic factors. Defence stocks, banks and companies likely to benefit from German infrastructure spending showed the strongest performance, while defensive areas such as utilities also performed well. Cyclical and consumer-exposed sectors like consumer discretionary, real estate and IT fell during the month.

The Company underperformed its reference index in March, with an underweight to defensive sectors and an overweight to global high-quality businesses detracting from performance.

Sector allocation provided negative attribution primarily driven by the Company’s overweight to consumer discretionary given emerging concerns around the US consumer. An underweight to financials was negative for returns as investors favoured domestically exposed, attractively valued assets.

Our underweight position in utilities also negatively impacted performance in March. In a rapid turnaround, utilities have shifted from deeply oversold levels compared to the European market to currently overbought levels. In mid-February, utilities were lagging the index materially on a one-year view, but now they are outperforming. This circa 15% outperformance over six weeks has only been seen five times in the past – every time during market crashes. This significant change in sentiment shows the volatility and pace of trading we are witnessing in markets. On the positive side, the Company benefited from a higher exposure to industrials.

Shares in Novo Nordisk were the largest detractor during the month given pressure on changing perceptions of the obesity market’s potential growth. This comes both as a product of the Cagrisema data release, showing diabetic patients still did not titrate to highest doses, as well as the longer than expected overhang of compounders in the US which have taken some near-term market share. Whilst the latter likely resolves through the courts, it may weigh on Novo’s prescription data in 2025 for longer than anticipated. We believe there is upside from the diabetes franchise, as well as optionality on other diseases, but believe the focus on obesity may hold greater influence on the equity return potential in the near term. The greater uncertainty here has led to a significant reduction in position size within the portfolio. We are mindful shares currently trade on a patent cliff multiple of around 8x end of decade P/E, despite the fact that growth will still likely outstrip other European pharmaceutical players. This suggests a higher risk premium on these shares given an uncertain backdrop for how obesity sales will evolve and indeed how geopolitical tensions may impact pharmaceuticals including Novo’s home country of Denmark.

A common theme of top detractors in the month came from the market selling companies with exposure to the US, particularly in regard to consumer businesses such as Richemont and Hermès. Adyen detracted for similar reasons given the payment platform’s dependence on consumer spending and shares were dragged by the weakening outlook for the US consumer during the month. This followed strong results during the previous month, with full-year earnings above expectations and forecasts of higher net revenue growth and margin expansion in 2025.

Semiconductor equipment businesses - ASMI and BE Semiconductor – detracted, likely on a combination of the market continuing to digest a set of mixed results in the previous month, as well as suffering from the market continuing to sell off anything related to AI and data centres. While we are disappointed in the near-term results versus expectations, these businesses’ tools are used in wide reaching applications – back-end and front-end - outside of the AI theme where a volume recovery has been long in the waiting. Thus far, management expect it to materialise in H2 2025 and both also reported positive order book developments in their respective leading-edge technologies of Gate All Around and Hybrid Bonding. However, this is an area of the market we must keep an eye on with respect to the influence of tariffs, especially those imposed in APAC markets.

Journals and analytics company RELX, one of the Company’s more defensive positions, was the top contributor. Shares were able to hold up better than the market, doing what we would hope to protect relative returns.

Not owning a number of the largest reference index underperformers – UBS, Kering, Infineon – also contributed to active returns.

Outlook

While near-term uncertainty has increased, we continue to see a resilient bottom-up picture of both consumers and corporates. In our home market, Europe is going through a renaissance moment, introducing potential for change with lasting impact to corporate earnings. We are focused on analysing change as it relates to positioning the portfolio for the duration earnings-streams we see likely to be supported for years and decades to come. We believe with some of the significant changes going on in the market – fiscal policy change, potential for a Ukraine ceasefire and earnings cycles turning – that the European equity rally can continue, although given the geopolitical backdrop this is unlikely to be a straight path. We would expect the shape of market drivers to change in time, with earnings becoming a larger determinant of returns as the narrow areas that have been bid up run out of steam.

Historically, Europe has been home to many world-class franchises that earn profits globally, including from the US and China. This remains true, but now there is a stronger domestic earnings contribution driven by an improved outlook for the continent.

There is potential recovery within rate-sensitive sectors such as construction, as Europe is currently in a rate-cutting cycle. Economic strength in Europe has been evident in the periphery—Spain and Italy, but now there is change in key countries like Germany with a new government forming and releasing fiscal constraints to stimulate the economy.

While the geopolitical landscape is challenging to navigate, especially with US policy keeping investors on their toes, focusing on changing earnings streams can help deliver strong long-term outcomes for investors. 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.

Unless otherwise stated all data is sourced from BlackRock as at 31 March 2025.

Any opinions or forecasts represent an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results.

This information should not be relied upon by the reader as research, investment advice or a recommendation.

Risk: Reference to the names of each company in this communication is merely for explaining the investment strategy, and should not be construed as investment advice or investment recommendation of those companies.

Portfolio manager biography

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Stefan Gries is co-manager of BlackRock Greater Europe Investment Trust plc. He is head of the European Equity team within the Fundamental Equity division of BlackRock’s Portfolio Management Group. He is co-manager on the European Absolute return (long/short) portfolios, as well as on Pan European and Europe ex UK long-only portfolios. Prior to joining BlackRock in 2008, Stefan spent two years at Scottish Widows Investment Partnership where he completed a two-year graduate programme. Since joining BlackRock, he has worked both as a portfolio manager and as an analyst covering, at various times, energy, pharmaceuticals and insurance on behalf of the European Equity team. He earned an MA in economics and Spanish from the University of St. Andrews in 2005.

Alexandra Dangoor is co-manager of BlackRock Greater Europe Investment Trust plc. Alexandra also has research responsibilities within the team’s financials research pod focused on the European banks and insurers. Alexandra joined the BlackRock Fundamental European Equity Team in 2019 after two years on BlackRock’s graduate rotation programme, where she was an analyst in the Natural Resources and European Equity teams. Alexandra earned a BSc degree in Mathematics and Economics at Bristol University, graduating in 2015, and an MSc in Investment and Wealth Management at Imperial College Business School, graduating in 2016. 

Board of directors

All the Directors are non-executive and independent of the Investment Manager. The Board as a whole constitutes the Audit and Management Engagement Committee.

Eric Sanderson (appointed April 2013) (Chairman) is a chartered accountant and a banker and was chief executive of British Linen Bank from 1989 to 1997 and a member of the management board of Bank of Scotland in his role as head of group treasury operations from 1997 to 1999. He was formerly chairman of MyTravel Group PLC, MWB Group Holdings, Dunedin Fund Managers Limited and Schroder UK Mid Cap Fund plc. He is presently chairman of JPMorgan Emerging Europe, Middle East & Africa Securities Limited.

Peter Baxter (appointed April 2015) has over 30 years’ experience in the investment management industry. He is an executive director of Snowball Impact Management Ltd, a social impact investment organisation, a non-executive director of Civitas Social Housing plc, and a trustee of Trust for London, and was a member of the Financial Reporting Council’s Conduct Committee. Previously he was chief executive of Old Mutual Asset Managers (UK) Ltd and worked for Schroders and Hill Samuel in a variety of investment roles.

Paola Subacchi (appointed July 2017) (Senior Independent Director) is an economist, writer and commentator on the functioning and governance of the international financial and monetary system. She is Professor of International Economics and Chair of the Advisory Board, Global Policy Institute, Queen Mary University of London, visiting professor at the University of Bologna, non-executive director of Scottish Mortgage Investment Trust PLC as well as Founder of Essential Economics Ltd. She writes regularly on Project Syndicate.

Ian Sayers (appointed February 2022) (Chairman of the Audit and Management Engagement Committee) is the former Chief Executive of the Association of Investment Companies (AIC), which he became in 2010 on his promotion from Deputy Director General. Prior to that, he was the AIC’s Technical Director, advising members on areas such as taxation, accounting, company law and regulation, as well as having a key role in its public affairs activity. He qualified as a chartered accountant and chartered tax advisor.

Sapna Shah (appointed 12 December 2023) has 20 years of investment banking experience advising UK companies, including listed REITs and investment companies, on IPOs, equity capital market transactions and mergers and acquisitions. She is a non-executive director of The Association of Investment Companies and a consultant at Panmure Gordon Limited. Prior to this she held senior investment banking roles at UBS AG, Oriel Securities (now Stifel Nicolaus Europe) and Cenkos Securities. She is currently a non-executive director of Supermarket Income REIT plc and BioPharma Credit PLC.

Andrew Impey (appointed 28 April 2025) has over 30 years’ fund management experience and more than 35 years’ investment trust experience. He has been lead manager on a broad range of funds including a sovereign wealth mandate, unit trusts and several investment trusts. He was previously a consultant at Rathbones Investment Management, a partner of Albion Capital Group LLP and joint managing director at OLIM Limited. Prior to joining OLIM in 2009, he was chief investment officer at Singer & Friedlander Investment Management. He is non-executive chair of the Pacific Assets Trust plc.