Summary of Investment Objective
The European Value 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. The Fund places particular emphasis on companies that are, in the opinion of the Investment Adviser, undervalued and therefore represent intrinsic investment value.
Fund Manager's Report (as at Jul 31, 2010)
The Fund underperformed its benchmark over the month.
Sector allocation had a negative effect but was largely offset by accurate stock selection. At the sector level, we were disadvantaged by being underweight in financials which rebounded after recent underperformance. Overweights in industrials and consumer staples also detracted whilst an underweight exposure to utilities made a positive contribution. At the stock level, we profited from owning a number of banks which rallied on the back of benign stress test results and less onerous terms for the impending Basel III legislation. These included Societe Generale, Lloyds, Barclays and Banco Santander. Stock selection within the telecommunications (Telefonica) and energy sectors was also rewarding. Other top positions included not owning Ericsson and Astrazeneca and having an overweight in Continental which reported encouraging results. Stocks to detract included Bilfinger Berger, Novartis and Centrica.
Over the month, we increased our weighting in the telecoms sector where we see superior free cash flow yield, cheap valuations and generous dividend yields. This was achieved through the purchase of Deutsche Telekom and an addition to Telefonica. We also increased our financials exposure by purchasing Swiss Re and Credit Suisse. These additions were partially funded through a reduction in the utilities sector where we sold E.On. We also decreased our allocation towards energy companies by selling Gazprom. Elsewhere, we made reductions in Sanofi-Aventis and Bayer.
Our outlook remains positive, despite the well-publicized 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. Europe offers a number of well-managed companies that are able to access the strongest areas of global growth through high quality product offerings. We anticipate a stronger-than-expected second quarter earnings season and expect this may stabilise investor confidence in the absence of supportive economic data. At month-end, the Fund is overweight in the industrials, consumer discretionary and consumer staples sectors and underweight in financials, utilities and materials.
Fund Fact (as at Jul 31, 2010 )
| Status | Sub-Fund of Luxembourg SICAV |
| Fund Manager | James Macmillan |
| Launch Date | Jan 8, 1997 |
| Base Currency | EUR (€) |
| Additional Dealing Currencies | GBP (£), USD ($) |
| Benchmark | MSCI Europe Value Net |
| Morningstar Sector | Equity Europe |
| Total Fund Size (m) | EUR (€) 141.9 |
| EUSD Fund Attributes | |
| EUSD Fund Status | out of scope |
| Fees | % |
| Annual Management Fee (A shares) | 1.50 |
| Initial Charge (A shares) | 5 |
| Codes | |
| ISIN | LU0072462186 |
| Bloomberg Equity Ticker | MLEUVAA LX |
| Reuters Page Id | BLRKIT |
| Swiss Valoren Number | 567964 |
| CUSIP | L1049G789 |
| Research Ratings | |
| Crosby Forsyth Rating | A |
| S&P Fund Management Rating | AA |
| Fund Risk Statistics | |||
|---|---|---|---|
| Name | 3 Years | 5 Years | Since Launch |
| Beta | 1.02 | 1.01 | 0.92 |
| Volatility (Annualised Standard Deviation) | |||
| European Value Fund | 25.5% | 20.9% | 18.7% |
| MSCI Europe Value Net | 24.5% | 20.2% | 18.9% |
Risk Grading
Low
High
Non-distributing
Important Information
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. 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.
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.