Top performing emerging Europe trust to wind up

Plans have been revealed to wind up BlackRock Emerging Europe investment trust, managed by Sam Vecht.

Funds and Investment Trusts July 10, 2018 by Holly Black

BlackRock Emerging Europe is to wind up, some 14 years after its launch.

The investment trust, which is managed by frontier markets specialist Sam Vecht, revealed that some 21.8 million shares, representing around 60 per cent of its issued share capital, would be liquidated following an unexpectedly large take-up of its tender offer for shares in May.

The board said the remaining assets, totalling around £48 million, were below the minimum level deemed necessary for the company to continue.

It says shareholders will be offered a full cash exit at net asset value less applicable costs. In an announcement, the board said the portfolio would continue to be run in line with the investment policy until proposals are approved by shareholders.

Neil England, chairman of the board, says: ‘The board has always recognised its role is to act in the best interests of shareholders. Our strategy has allowed our well-regarded investment managers to take conviction-based positions and invest with confidence for a fixed period of time.’

BlackRock took over the mandate for the Money Observer Rated Fund in 2009, since when it has been managed by Vecht. Over five years, the trust ranked third among 40 Morningstar peer group funds investing in eastern Europe, according to the annual report to 31 January. 

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The trust has more than half of its assets in Russian stocks including Sberbank and oil giants Lukoil and Gazprom, with further investments in Turkish, Polish and Greek equities.

England adds: ‘We fully understand that following very strong absolute and relative returns, many shareholders have opted to take profits on their positions. It is their decision where they choose to invest their money and they should be free to seek out the most promising investment opportunities, wherever they are to be found.’

What alternatives are there for investors keen to maintain some exposure to the region? The only other investment trust that focuses specifically on emergent European markets is Baring Emerging Europe.

Laith Khalaf, investment analyst at Hargreaves Lansdown, says: ‘What we don’t know yet is whether there will be any alternative arrangements which allow those who want to remain invested in the region to do so. It’s probably worth waiting to see what proposals the BEEP board puts forward, to see if there is any other option other than taking cash.’

 

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