BGF Continental European Flexible Fund - Class A
Summary of Investment Objective
The Continental European Flexible Fund seeks to maximise total return. The Fund invests at least 70% of its total assets in the equity securities of companies domiciled in, or exercising the predominant part of their economic activity in Europe excluding the UK. The Fund normally invests in securities that, in the opinion of the Investment Adviser, exhibit either growth or value investment characteristics, placing an emphasis as the market outlook warrants.
Fund Manager's Report (as at Jul 31, 2010)
The Fund underperformed its benchmark over the month.
Underperformance was largely caused by a strong sector rotation as investors moved capital back into financials and telecomms stocks. Indeed, despite a positive contribution from stock selection, sector allocation detracted from active returns as the Fund’s underweight position in financials proved the most significant influence on performance. Overweight positions in consumer goods and industrials also detracted. At a stock level, a position in Swiss hearing aid company Sonova underperformed after two hearing aid distributors reported muted Q2 earnings. On a more positive note, the Fund’s position in French financial Societe Generale performed well in a rallying market. SocGen had been heavily sold off over what we feel were inflated concerns over their exposure to peripheral sovereign debt, and saw a strong price correction in July as the sector rallied. In addition, a position in Finnish industrial Konecranes performed particularly well after reporting very strong Q2 earnings in the month.
At the end of the month, the Fund was positioned overweight industrials, consumer goods, telecoms and technology and underweight financials, basic materials, oil & gas, healthcare and utilities.
Our outlook remains positive, despite the well-publicised economic headwinds within the region. Europe remains under-owned and valuations continue to look compelling on a relative and historic basis. Europe also looks attractive on a yield basis with many European companies committing to or confirming dividend policies. With net cash on their balance sheets, we would expect European corporates to look for M&A opportunities in the coming months.
Fund Fact (as at Jul 31, 2010 )
| Status | Sub-Fund of Luxembourg SICAV |
| Fund Manager | Alister Hibbert |
| Re-Launch Date | Jul 22, 2005 |
| Base Currency | EUR (€) |
| Additional Dealing Currencies | GBP (£) |
| Benchmark | FTSE World Europe ex UK |
| Morningstar Sector | Equity Europe Excluding UK |
| Total Fund Size (m) | EUR (€) 264.5 |
| EUSD Fund Attributes | |
| EUSD Fund Status | out of scope |
| Fees | % |
| Annual Management Fee (A shares) | 1.50 |
| Initial Charge (A shares) | 5 |
| Codes | |
| ISIN | LU0224105477 |
| Bloomberg Equity Ticker | MIGOEAE LX |
| Swiss Valoren Number | 2234466 |
| CUSIP | L1049F492 |
| Research Ratings | |
| Crosby Forsyth Rating | A |
| Fund Risk Statistics | |||
|---|---|---|---|
| Name | 3 Years | 5 Years | Since Launch |
| Beta | 1.02 | 1.02 | 1.03 |
| Volatility (Annualised Standard Deviation) | |||
| Continental European Flexible Fund | 23.9% | 20.1% | 20.0% |
| FTSE World Europe ex UK | 22.1% | 18.5% | 18.2% |
Risk Grading
Low
High
Non-distributing
Important Information
‡ On 1 July 2005 the benchmark changed from the FTSE World Europe ex-UK Index to the MSCI Europe Ex-UK Growth Index (new index to be "spliced" with the history of the old benchmark).
The information on this website is available to Qualified Investors and Professionals in some jurisdictions on a limited private placement basis subject to applicable laws and regulations in the country of distribution. The information is confidential and should not be reproduced or distributed to persons other than the recipient.
The investment objective stated above is a summary of the main objectives of the Fund. Please refer to the BGF prospectus for full details.
A limited range of BGF sub-funds have a distributor status A share class that seeks to comply with UK Distributor Status requirements. Please contact the Manager for more information.
The fund invests a large portion of assets which are denominated in other currencies; hence changes in the relevant exchange rate will affect the value of the investment. The fund typically invests in smaller company shares which can be more unpredictable and less liquid than those of larger company shares. Past performance is not a guide to future performance and should not be the sole factor of consideration when selecting a product. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed.
This Fund was previously known as the BlackRock Offshore Sterling Trust (MLOST) European Fund. At midnight on 22 July 2005 assets were transferred into the BGF Continental European Growth Fund which has an Annual Management Charge of 1.5%. Past performance of the MLOST European Fund has been maintained but reflects the revised base currency and charging structure of the new BGF sub-fund.
BlackRock Global Funds (BGF) is an open-ended investment company established in Luxembourg which is available for sale in certain jurisdictions only. BGF is not available for sale in the U.S. or to U.S. persons. Product information concerning BGF should not be published in the U.S. It is recognised under Section 264 of the Financial Services and Markets Act 2000. BlackRock Investment Management (UK) Limited is the UK distributor of BGF. Most of the protections provided by the UK regulatory system, and the compensation under the Financial Services Compensation Scheme, will not be available. A limited range of BGF sub-funds have a distributor status A sterling share class that seeks to comply with UK Distributor Status requirements. Subscriptions in BGF are valid only if made on the basis of the current Prospectus, the most recent financial reports and the Simplified Prospectus which are available on our website. Prospectuses, Simplified Prospectuses and application forms may not be available to investors in certain jurisdictions where the Fund in question has not been authorised.
Sources: Fund – BlackRock Investment Management (UK) Limited (BIM(UK)L), Indices - Datastream, BIM(UK)L. Quartiles - Standard & Poor's. BIM(UK)L Risk Grading: High Risk (on a scale of Low, Medium, Medium/High and High). This grading applies to Funds with emerging market, small capitalisation, or narrowly focused/concentrated equity mandates, which may restrict liquidity and increase the volatility of returns. It should only be used for comparison with other BlackRock Global Funds (BGF) and, in particular, should not be used in comparison with Funds not provided by BIM(UK)L. The grading is indicative of the level of risk of a particular Fund and is not supposed to be a guarantee of likely returns. If you are in any doubt as to the level of risk that you should take, you should seek Independent Advice. BIM(UK)L Risk Grading: Medium/High Risk (on a scale of Low, Medium, Medium/High and High). This grading applies to Funds which may be expected to have all, or at least a high proportion, of their assets invested in equities, or in bonds rated below investment grade. It should only be used for comparison with other BlackRock Global Funds (BGF) and, in particular, should not be used in comparison with Funds not provided by BIM(UK)L. The grading is indicative of the level of risk of a particular Fund and is not supposed to be a guarantee of likely returns. If you are in any doubt as to the level of risk that you should take, you should seek Independent Advice.Performance is shown as at Jul 31, 2010 in EXD on a NAV price basis with income reinvested. Fund performance figures are calculated net of fees.
Due to increased market volatility over the past 12-18 months, and despite the application of the same investment approach, the manager has witnessed a higher level of divergence in the Fund’s returns from the benchmark than normal historical levels. This divergence is sometimes called "Tracking Error" or "Active Risk". The Fund is not managed with the intention of tracking the returns of the benchmark. Active risk refers to that segment of risk in an investment portfolio that is due to active management decisions made by the portfolio manager. It does not include any risk (return) that is merely a function of the market's movement as represented by the benchmark. The higher the active risk, the greater the potential variance in returns compared to the benchmark. It is our expectation that, as market volatility continues to decline, so the Fund's elevated levels of active risk should also reduce. However, were similar market conditions to reoccur, the Fund could, once again, generate levels of active risk higher than normal historical levels. Therefore, we have recently decided to broaden the permissible parameters of the Fund. It is important to understand that this change has not affected the investment approach used by the fund manager.