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 November 11, 2015 - 7:02 AM EST
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All information is at 31 OCTOBER 2015 and unaudited.
Performance at month end with net income reinvested
One Three One Three Launch
Month Months Year Years (20 Sep 04)
Net asset value* (undiluted) 3.5% -3.6% 10.0% 41.0% 210.9%
Net asset value* (diluted) 3.1% -3.0% 9.6% 41.2% 209.9%
Share price 4.3% -2.1% 12.0% 41.0% 202.7%
FTSE World Europe ex UK 5.0% -4.1% 5.2% 38.3% 142.4%
Sources: BlackRock and Datastream
At month end
Net asset value (capital only): 251.48p
Net asset value (including income): 254.67p
Net asset value (capital only)*: 250.90p
Net asset value (including income)*: 253.58p
Share price: 246.25p
Discount to NAV (including income): 3.3%
Discount to NAV (including income)*: 2.9%
Subscription share price: 10.00p
Net gearing: 0.5%
Net yield**: 2.0%
Total assets (including income): £266.8m
Ordinary shares in issue***: 104,309,663
Subscription shares: 20,545,178
Ongoing charges****: 0.89%
* Diluted for subscription shares and treasury shares.
** Based on a final dividend of 3.35p for the year ended 31 August 2015 and an interim dividend of 1.65p per share for the year ended 31 August 2015.
*** Excluding 5,488,898 shares held in treasury.
**** Calculated as a percentage of average net assets and using expenses, excluding performance fees and interest costs, after relief for taxation for the year ended 31 August 2015.
Sector Analysis Total Assets  Country Analysis Total Assets 
(%)  (%) 
Financials 31.3  France 19.2 
Industrials 16.2  Switzerland 15.3 
Health Care 13.7  Germany 14.3 
Consumer Goods 12.1  Italy 8.9 
Consumer Services 9.0  Netherlands 8.3 
Technology 8.0  Sweden 8.0 
Telecommunications 4.0  Denmark 7.3 
Basic Materials 3.8  Ireland 6.1 
Oil & Gas 2.0  Finland 4.8 
Net current liabilities (0.1) Belgium 2.4 
-----  Turkey 2.3 
100.0  Spain 1.7 
=====  Russia 1.5 
Net current liabilities (0.1)
Ten Largest Equity Investments
% of
Company Country Total Assets
Novartis Switzerland 5.0
Novo Nordisk Denmark 4.6
AXA France 3.9
Bayer Germany 3.8
LVMH Moët Hennessy France 3.0
Heineken Netherlands 2.8
Deutsche Telekom Germany 2.7
Unibail-Rodamco France 2.7
RELX Netherlands 2.5
Ryanair Ireland 2.5
Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:
During the month, the Company’s NAV rose by 3.5% and the share price increased by 4.3%. For reference, the FTSE World Europe ex UK Index was up 5.0% during the period.
Following two months of market falls, European equities rose very strongly in October. This relief rally was initially caused by the Federal Reserve’s decision to delay raising rates, which investors interpreted as a signal that central bank support may relieve some of the weaker data seen in emerging markets. This was followed up by the European Central Bank (ECB) hinting at further easing (potentially in December) and the People’s Bank of China cutting its deposit rate. This rally also caused a significant rotation within the market with areas that had performed very poorly (such as commodity, energy and emerging market-related stocks) leading the rise. Indeed, autos, oil & gas and basic materials were the top three performing sectors in October, whereas sectors including health care and financials significantly underperformed the market. October also saw the start of third quarter earnings announcements for European companies, with the results broadly disappointing, especially in cyclical sectors such as consumer discretionary and industrials.
The Company’s underperformance in October was largely due to stock selection; however, sector allocation also detracted illustrating the effect of the market’s positioning-led rotation that took place towards the beginning of the month. The largest relative losses were realised from an underweight holding to consumer goods and an overweight to financials.
Amongst the top detractors to performance over the month were KBC Groep and Bank of Ireland, as domestic focused stocks underperformed their emerging market counterparts. Equally, the rhetoric coming from the central banks in both Europe and the US suggesting lower rates for longer, put increasing pressure on expectations for net interest income (the spread a bank earns between the deposits it takes and loans it makes) for the banking sector as a whole.
We also saw holdings in Novo Nordisk and Novartis detract as the market became more risk-on and many defensive names gave up some of their strong returns realised in the last quarter. In the same vein, not holding Nestlé contributed to relative performance over the month.
Despite its defensive nature, Heineken bucked the downward trend of these names, delivering strong performance during October. The company released Q3 results with sales 4% ahead of expectations, largely driven by strong trade in Europe. The largest contributor to performance was Russian internet company Yandex which reported an 18% year-on-year increase in revenues for Q3.
At the end of the period, the Company had higher weightings when compared with the reference index to financials, technology, consumer services and industrials. The Company had lower exposure to consumer goods, basic materials, oil & gas, health care, utilities and telecoms.
Despite the uncertainties and worries which have dominated the market since the summer, we remain constructive on European equities. With the likelihood of further incremental support from the ECB through expansion of the current Quantitative Easing programme, domestic growth should remain underpinned in our view. Recent positive European economic/sentiment indicators suggest that the European economy has a degree of resilience in the face of the increased concerns over a global slowdown, which is encouraging. We believe that the favourable credit conditions, subdued wage growth and weaker Euro can help boost economic momentum and in turn European corporate earnings together, with some additional profit margin normalisation. We remain of the view that the European equity universe offers undemanding valuation opportunities but stock selection remains a focus during this period of increased volatility and heightened uncertainty around the global economic growth outlook.
11 November 2015
Latest information is available by typing 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.

Source: PR Newswire (November 11, 2015 - 7:02 AM EST)

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