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

28 February 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 0.7% and the share price fell by 0.8%. For reference, the FTSE World Europe ex UK Index returned 2.2% during the period.

European ex UK markets rose during February, marking one of the strongest starts to the year in over a decade for European equities and outperforming US equities. Europe is benefiting from its cyclical nature, with strong performance in banks and assets tied to the global economy, while the US faces challenges such as a high budget deficit, lower consumer confidence and heavy reliance on major tech companies (Mag7).

So far this year, markets have traded heavily around various narratives, including a European domestic recovery, the Deepseek news, or a potential peace deal in Ukraine.

In February, we observed increasingly narrow markets driving strong returns. This relatively narrow leadership was driven by banks, which have shown positive trends for some time, and European defence stocks anticipating increased military spending by EU states. Conversely, companies with accelerating growth and small upgrades, particularly in the tech and data centre space, have not performed in line with upgrades due to market concerns about hyperscale capex spending.

The full-year earnings season has been positive for the Company, with most companies' earnings exceeding expectations, even though markets haven't always rewarded them. Generally, earnings expectations remain relatively low, especially compared to US peers, which could support positive earnings surprises in upcoming quarters.

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

In sector terms, the Company’s underweight positioning to financials was negative. A lower allocation to consumer staples and overweight positioning to technology also dragged on sector attribution. This was partially offset by a higher exposure to industrials.

The largest negative contribution came from the Company’s semiconductor and data centre exposure, on a continuation of the recent weakness in shares. BE Semiconductor, ASMi and Schneider Electric were amongst the largest detractors. BE Semiconductor reported earnings which included a small miss on Q4 revenues and a Q1 2025 guide below lofty consensus expectations. The lower guide was driven almost entirely by the core business which awaits a pickup in demand for PC and smartphone end markets – something management expects to see in H2 2025. Meanwhile, there was better news in Hybrid Bonding where the pace of adoption is accelerating, and new client orders have begun to come through.

Similarly, ASMi missed consensus expectations for Q4 order intake driven by parts of the business which masked strong acceleration in their key Gate All Around (GAA) transistors used in leading edge applications.

Despite detracting over the month, Schneider Electric reported strong financial results for FY24, achieving record revenues of EUR38bn, up 8% organically from the previous year. The electrification and automation segments contributed strongly. Although the data centre segment saw some weakness, the value chain remains positive despite some uncertainty in the outer years. Data centres had already become increasingly important before AI, and modernisation of the existing installed base should continue to drive growth.

The portfolio’s shares in RELX were weak on the market’s momentum reversal. Meanwhile, the company reported strong full year results including 7% organic growth at group level with an outlook pointing to 2025 as another year of strong underlying growth, supporting the longer-term thesis that the business can continue to accelerate growth over time.

On the positive side, AIB Group was the single largest contributor to relative returns. Positive trends in the banking sector, such as deposit growth, solid balance sheets, and capital returns, have been observed for a while. With no changes to fundamental news flow, interest rates, FX rates, or swap rates, the sector rallied on the back of increased investor demand and flows into European cyclicals trading at low valuations.

Kingspan was also amongst the largest contributors to relative returns this month. Shares were up after the company reported solid Q4 earnings including a 3% beat in EBIT at group level. This was largely driven by the Roofing & Waterproofing division which beat EBIT expectations by 27% with margins beating by 130bps. Management indicated they are happy with 2025 consensus expectations and pointed to a strong order book with the Data Solutions division seeing a tailwind due to the demand from data centres.

Shares in Adyen rose after they reported impressive H2 2024 and FY24 financial results. For H2, Adyen reported net revenue up 22% year-on-year, with an EBITDA margin of 53%. Adyen’s superior product offering continues to give them a competitive advantage versus peers and positions the company well to sustain a mid-20s CAGR over the medium term.

Finally, Ferrari also contributed to relative returns as the company reported much better than expected earnings and order book numbers in Q4 results. The order book now covers the whole of 2026, giving the company good earnings visibility for at least the next two years. 2025 guidance suggested further upside is still to come as they expect to hit the top end of 2026 profitability targets a year early.

Outlook

The underlying economic conditions in Europe remains solid, with both consumers and corporations in healthy financial positions. The disinflation process is progressing, with the European Central Bank projecting headline inflation to average 2.1% in 2025 and 1.9% in 2026. Globally, rate-cutting cycles have begun, with the Federal Reserve following Europe's lead.

After a long hiatus, capital expenditure (capex) has returned, supporting a lot of cyclical businesses and potentially driving higher earnings over a multi-year period, which has driven us to maintain our cyclical exposure. There are significant secular opportunities in areas such as the energy transition and advancements in AI.

The luxury sector, having been through two years of normalisation, could potentially start to see improvements in 2025, as resolving US election uncertainty has further improved the economic backdrop in the US. However, it remains crucial to be selective in Europe – defensive exposures are more attractive in the industrials sector, while demand for most consumer staples remains soft.

Additionally, the European market composition has structurally improved, becoming a higher quality market while valuations are at a record-wide discount relative to the US.

Investor sentiment toward Europe has been subdued and is now starting to turn decisively as Europe continues to offer compelling valuation opportunities. The potential for structural reforms in Germany and economic stimulus from China could help to continue to shift sentiment more positively. That said, our investment approach prioritises company specific opportunities and management teams over a country view or political developments. Our focus lies on industries with robust structural drivers, as these have a more profound impact on long-term outcomes than country-specific factors. A strong U.S. economy, positive real wage growth in Europe and potential stimulus measures in China, could create a supportive backdrop for Europe’s globally oriented companies.

Unless otherwise stated all data is sourced from BlackRock as at 28 February 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.