The managers of BlackRock Continental European Income look to identify undervalued European companies (or companies with a predominant part of their business based on the Continent) that offer reliable, sustainable dividends; potential dividend growth; and protection against inflation, with a lower level of risk.
Our opinion
BlackRock’s strong European team and the BlackRock Continental European Income fund managers’ experience combine to produce an impressive European fund, which pays an above-average yield, with below-average volatility.
Company description
A part of the US-based BlackRock Group, BlackRock manages assets across equity, fixed income, cash management, alternative investment and real estate strategies. It provides this comprehensive range of products across numerous continents with more than 130 investment teams in 30 countries.
Fund manager
Andreas Zoellinger has managed the BlackRock Continental European Income fund since launch, and was joined by co-manager Brian Hall in February 2021.
Andreas is part of BlackRock's highly-regarded European equity team. He joined the company from Merrill Lynch, where he worked from 2001 as a European analyst. Andreas has a degree in Business Administration from the University of Munich and the University of Edinburgh.
Brian is also part of BlackRock’s European equity team and is managing director and portfolio manager. He has been with BlackRock since 2007, having previously worked at Lehman Brothers since starting his career in 1999. He has a degree in Economics from Bristol University.
Our approach to equity income investing is different, capturing steady growth and low risk cash returns by investing flexibly across the economic cycle. We focus on dividend reliability and, while our strict quality criteria do not change, the types of companies which qualify for inclusion do.
Andreas ZoellingerFund manager
Investment process
The investment process of BlackRock Continental European Income is focused on fundamental company analysis, with a strong awareness of macroeconomic trends. The mandate is flexible with regard to company size and country exposure, and the managers move away from the benchmark when necessary to better protect total returns and ensure a superior yield. Andreas and Brian will actively manage the portfolio to find a balance of companies with large but secure dividends, and those able to grow dividends faster than the average company. Research is central to the investment process and a key source of added value for the fund.
ESG
ESG - Integrated
Blackrock’s well-resourced European team has a consistent and sophisticated ESG analysis system built into the investment process. It has specific risk inputs undertaken by analysts, and the output is highlighted as a prominent section of the stock research template. The key risks revolve around governance - such as audit quality, executive pay and ownership structures. There are also environmental factors on toxic emissions and waste, and social concerns on factors such as labour management. Specific scores are provided on each stock for other key ESG issues, such as carbon metrics, which are provided by third party data. These scores do not preclude investment, with the managers having flexibility to choose, but the inherent risks are made very prominent. Ultimately, it is a balance of fulfilling the objective of the income-seeking portfolio whilst being cognisant of the ESG risks some companies may face.
Risk
As part of the portfolio construction, the managers follow a rigorous risk control process to reduce volatility, while maximising rewards, resulting in a fund that is less volatile than the index. BlackRock create comprehensive risk reports from a dedicated team to show the factors to which the portfolio is exposed, as well as the impact of each potential change to the portfolio.
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