THIS IS AN ADVERTISING FEATURE 

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Marketing material.

A lot has been said about the concentration in the US markets, but investors in European markets have also been focused on a handful of companies. These ‘Granolas’ may be more diversified than the technology-focused Magnificent Seven – and not as expensive – but the focus on them suggests investors remain nervous about branching out. However, there are a few reasons this may change in the coming months.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

The Granolas comprise 11 index heavyweights: GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L'Oréal, LVMH, AstraZeneca, SAP, and Sanofi. Together they represent around one-quarter of the STOXX 600's market capitalisation^[1]. They are large cap, global companies that have managed to transcend the recent weakness in the European economies. They often pay reliable dividends and have predictable earnings.

Investors in European equities have gravitated to these for their stability and consistency at a time when the world seemed uncertain. They have been worried about domestic recession, fragile geopolitics and the weakness in China. On the BlackRock Greater Europe Investment trust, we recognise the role these companies can play and hold a number of them in the portfolio.

New investment opportunities as European economic recovery continues

However, as European economic recovery emerges, and there is a potential cut in interest rates on the horizon, investors may have the confidence to explore new investment opportunities. We see a lot of capital in money market funds sitting on the sidelines^[2]. As confidence improves, money moving out of these money market funds, and away from the Granolas, could spark opportunities elsewhere.

We are starting to see sentiment shift already. Fund flows into European equities have improved^[3]. Where companies are delivering good earnings, markets are reacting strongly. As Europe and other global economies recover, there should be stronger contributions from different parts of the market.

There are plenty of under-explored areas of growth in European markets, left behind as investors have hunkered down in a handful of European large cap companies. For a number of companies, this has opened up a significant gap between market sentiment and the company’s operational performance. As active investors, this allows us to pick up good companies at lower valuations.

Structural growth opportunities

This environment has created opportunities for the BlackRock Greater Europe Investment trust. We continue to focus on areas of structural growth: this includes semiconductors, luxury goods and some of the industrial names, particularly those benefiting from rising capital spending on green energy and energy efficiency.

We think that the corporate sector in Europe is healthy, with low debt and strong margins. Management teams are optimistic about the potential growth trajectory for their businesses. That, in turn, should be good news for the consumer because it means employment is likely to remain high. The energy supply chain crisis is over and inflation is falling. These should all help businesses across the region.

That said, we are not blind to the risks. We retain some defensiveness in the portfolio. However, in the long-term, our view is that buying companies that are beneficiaries of major themes in the global economy insulates the trust against many short-term risks.

We believe an improving environment, and – potentially – falling interest rates may encourage investors to broaden their horizons in the remainder of 2024. This could see them look beyond the Granolas to the opportunities elsewhere in European markets.

For more information on how to access the opportunities presented by the European sector, please visit www.blackrock.com/uk/brge

 

Risk Warnings

Investors should refer to the prospectus or offering documentation for the funds full list of risks.

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Marketing material.

Description of fund risks

Counterparty Risk: The insolvency of any institutions providing services such as safekeeping of assets or acting as counterparty to derivatives or other instruments, may expose the Fund to financial loss.

Currency Risk: The Fund invests in other currencies. Changes in exchange rates will therefore affect the value of the investment.

Emerging Markets: Emerging markets are generally more sensitive to economic and political conditions than developed markets. Other factors include greater 'Liquidity Risk', restrictions on investment or transfer of assets and failed/delayed delivery of securities or payments to the Fund.

Gearing Risk: Investment strategies, such as borrowing, used by the Trust can result in even larger losses suffered when the value of the underlying investments fall.

Liquidity Risk: The Fund's investments may have low liquidity which often causes the value of these investments to be less predictable. In extreme cases, the Fund may not be able to realise the investment at the latest market price or at a price considered fair.

Important Information

In the UK this is issued by BlackRock Investment Management (UK) Limited, authorised and regulated by the Financial Conduct Authority. Registered office: 12 Throgmorton Avenue, London, EC2N 2DL. Tel: + 44 (0)20 7743 3000. Registered in England and Wales No. 02020394. For your protection telephone calls are usually recorded. Please refer to the Financial Conduct Authority website for a list of authorised activities conducted by BlackRock.

UK Investment Trust Funds: This document is marketing material. The Company is managed by BlackRock Fund Managers Limited (BFM) as the AIFM. BFM has delegated certain investment management and other ancillary services to BlackRock Investment Management (UK) Limited. The Company’s shares are traded on the London Stock Exchange and dealing may only be through a member of the Exchange. The Company will not invest more than 15% of its gross assets in other listed investment trusts. SEDOL™ is a trademark of the London Stock Exchange plc and is used under licence.

Net Asset Value (NAV) performance is not the same as share price performance, and shareholders may realise returns that are lower or higher than NAV performance.

The investment trusts [listed below/above/in this document] currently conduct their affairs so that their securities can be recommended by IFAs to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to nonmainstream investment products and intend to continue to do so for the foreseeable future. The securities are excluded from the Financial Conduct Authority’s restrictions which apply to non-mainstream investment products because they are securities issued by investment trusts. Investors should understand all characteristics of the funds objective before investing. For information on investor rights and how to raise complaints please go to https://www.blackrock.com/corporate/compliance/investor-right available in local language in registered jurisdictions.

BlackRock has not considered the suitability of this investment against your individual needs and risk tolerance. To ensure you understand whether our product is suitable, please read the fund specific risks in the Key Investor Document (KID) which gives more information about the risk profile of the investment. The KID and other documentation are available on the relevant product pages at www.blackrock.co.uk/its. We recommend you seek independent professional advice prior to investing.

Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

This document is for information purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock funds and has not been prepared in connection with any such offer.

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MKTGH0524E/S-3585706

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