Summary of Investment Objective
The Emerging Europe 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, developing European countries. It may also invest in companies domiciled in and around, or exercising the predominant part of their economic activity in and around, the Mediterranean region.
Fund Manager's Report (as at Jul 31, 2010)
The Fund underperformed its benchmark over the month.Our defensive positioning, which was beneficial in June, detracted in July. Specifically, our underweight position in Poland, which rose by over 10%, detracted although this was partially offset by gains from the underweight position in Russia. Key contributors included Polish vodka producer and distributor CEDC which recovered strongly after a weak first quarter. Russian electric utility MRSK rose by over 20% after a positive update regarding proposed regulatory changes. The portfolio also benefited from the position in Kazakh mining group Kazakhmys. Hungarian bank OTP rose following the easing of European banking crisis fears and the announcement that EU regulators were satisfied with the firm’s capital adequacy ratio. The main detractors included Russian telecoms company Vimpelcom, Turkish gold miner Koza Altin and Russian miner Polyus Gold which encountered regulatory and legal difficulties in its proposed merger with KazakhGold.During July, we reduced the overweight in Hungary and added to holdings in Turkey. Specifically, we reduced the holding in Hungarian bank OTP into strength and took some profits on Hungarian energy company MOL. We also reduced the position in Hungarian telecom Magyar Telekom which rallied strongly in the month following the announcement of the purchase of cable TV and internet service provider Modultechnika. In Turkey, we added to holdings in bank Turkiye Garanti Bankasi and in commercial & freight airline Turkish Airlines which we expect to benefit from partnerships with local jet fuel distributors and a recovery in passenger volumes. A new investment was made in Kazakh copper miner Kazakhmys, which subsequently rose strongly.
Emerging European equities remain attractive on low valuations compared to other markets. Corporate earnings growth will be strong in 2010 as companies recover from the credit crisis and there is further upside from upgrades to forecasts. We are overweight Hungary and the Czech Republic as we believe that concerns that Hungary may be the next ‘Greece’ are overdone and that the market offers significant value. We continue to overweight the consumer staples sector given its long-term growth opportunities. Currently, the portfolio remains underweight Turkey, where we have been concerned about the impact of higher inflation. However, following better-than-expected inflation data and global dis-inflationary trends, we have reduced this underweight. We are significantly underweight the materials sector on fears that slowing Chinese growth and high global inventory levels will impact pricing.
Fund Fact (as at Jul 31, 2010 )
| Status | Sub-Fund of Luxembourg SICAV |
| Fund Manager | Sam Vecht |
| Launch Date | Dec 29, 1995 |
| Base Currency | EUR (€) |
| Additional Dealing Currencies | GBP (£), USD ($) |
| Benchmark | MSCI EM Europe 10/40 (net) |
| Morningstar Sector | Equity Europe Emerging Markets |
| Total Fund Size (m) | EUR (€) 2216.0 |
| EUSD Fund Attributes | |
| EUSD Fund Status | out of scope |
| Fees | % |
| Annual Management Fee (A shares) | 1.75 |
| Initial Charge (A shares) | 5 |
| Codes | |
| ISIN | LU0011850392 |
| Bloomberg Equity Ticker | MIGSEEI LX |
| Reuters Page Id | BLRKIB |
| Swiss Valoren Number | 618455 |
| CUSIP | L1049F591 |
| Research Ratings | |
| Morningstar Qualitative Rating | Standard |
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. The fund invests in economies and markets which may be less developed. Compared to more established economies, the value of investments may be subject to greater volatility due to increased uncertainty as to how these markets operate. 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.
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: 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.Performance is shown as at Jul 31, 2010 in EUR on a NAV price basis with income reinvested. Fund performance figures are calculated net of fees.