BlackRock Greater Europe has announced results for the year ended 31 August 2015. The total return on net assets was 7.3% and the return to shareholders 6.8% both of which compare favourably with the 1.3% return on the FTSE World Europe ex UK Index. The dividend was upped from 4.7p to 5p.
The manager’s report says stock selection proved to be a very strong driver of the portfolio’s performance when compared with the broader market. The top contributor to performance during the year, relative to the reference index, was Irish airline Ryanair which returned 64%. The company increased its full-year net profit guidance by around 20% after experiencing strong passenger growth in the latter half of the year. The firm has effectively revamped its offer to attract customers back and is starting to tackle the business market by offering an attractively priced business ticket with flexible fares. Despite external shocks to the travel industry during the year, ‘Grexit’ fears and the tragic events in Tunisia, the company saw bookings for the summer 4% ahead of the previous year. 2016 forward guidance posted by the company in May suggests a likely continuation of these positive trends.
Anima Holding was an exceptionally strong performer during the year, with the share price rising by 92%. The Italian asset manager has been a beneficiary of the growing contingent of Italian investors who face historically low yields on traditional income investments. In this context, Anima has seen strong asset inflows and increases in management fee margins. They also stand to benefit from a strategic alliance with Poste Italiane to distribute their funds into the wider Italian savings market.
Novo Nordisk, a leading franchise for diabetes treatment, also contributed positively to performance over the year with a share price return of 33%. The company rallied in March after resubmitting applications for a key drug in the
U.S., suggesting the likelihood of approval and improved market positioning against competitors. Additionally, the company is placed to revolutionise the GLP-1 market with a drug which can help individuals with type 2 diabetes
achieve both good glycaemic control and, potentially, a reduction in the associated weight gain.
The Company’s sector allocation detracted from performance over the year. Specifically, the decision to have lower exposure to consumer goods and a higher exposure to industrials caused performance to suffer somewhat when
compared with the broader market. However, the lower exposure to both the utilities and oil & gas sectors proved positive for performance, as both sectors have seen negative returns over the year.
Investments in companies based in Turkey and Russia proved the weakest overall during the year. The largest detractor from performance in the twelve months was Halk Bank, falling by 43%. The Turkish market was weak, particularly towards the end of the year, as negotiations to form a new government have failed. The election has been rescheduled for November, increasing political uncertainty. Halk Bank, as well as its Turkish competitor Garanti Bank, suffered in this sell-off despite the companies’ consistent record of generating high returns on equity.
Sberbank of Russia also fell heavily, along with all Russian assets at the end of 2014, returning -29% in the period. Investors were concerned about the impact of the conflict in Ukraine, the sliding oil price and its impact on the
wider economy. Even though the stock has seen some recovery during the first half of 2015, it has yet to recoup all of its losses despite announcing results that were ahead of market expectations.
BRGE : BlackRock Greater Europe outperforms aided by Ryanair