BlackRock Continental European Income added to Wealth Shortlist

BlackRock Continental European Income was added to the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential on 26 August 2022.

The fund aims to provide investors with an attractive income alongside growth in their investment. The managers mainly invest in larger, more established European businesses, but have the flexibility to invest in higher-risk small and medium-sized businesses as well.

We think the fund could work well in an investment portfolio focused on income, or provide diversification to European or other global funds focused on growth. The managers also aim to provide some resilience during turbulent times for markets, which could provide some balance alongside other European equity funds in a more adventurous income-focused portfolio.

Andreas Zoellinger has managed the fund since launch in May 2011. He boasts over 22 years’ experience in the investment industry and is the longest standing member on the BlackRock European team. Zoellinger worked for Merrill Lynch Investment Managers from 2001, which then merged with BlackRock in 2006.

Brian Hall became co-manager in March 2021. He’s been with BlackRock since 2007 and has worked with Zoellinger on the European team ever since.

Both managers run other funds and investment strategies. Zoellinger co-manages the Pan European Equity Income fund, as well as the Eurozone and Euro Markets funds. Hall has run the BGF European Value fund since December 2010 and co-manages the Pan-European fund alongside Zoellinger. We think this is a reasonable workload given each strategy is managed with a similar investment process, and there’s a high level of overlap.

Our conviction lies more with Zoellinger, who is the more experienced of the two, but Hall has impressed. He brings a strong background and track record of investing in European value, which complements Zoellinger’s skillset. Both managers can call upon the support of the wider European team at BlackRock, which is well resourced and experienced.

The managers like companies with a competitive advantage or brand that others struggle to replicate, strong balance sheets, and high-quality management teams. They aim for a blend of quality, income, and growth opportunities within the fund, so split it into three buckets – high yield, steady dividend growth and structural growth.

We’ve monitored the team for many years. It’s currently one of the largest teams covering European investments, and we hold the team in high regard. Following a recent detailed review of the European sector and several meetings with the managers, our conviction has grown stronger.

The fund’s focus on income means it offers an attractive yield for clients. As of the end of July 2022, the fund yields 4.28%, though income is not guaranteed, and yields aren’t a reliable indicator of future income.

We like the resilient and defensive nature of the managers’ investment approach and admire the team’s experience and track record. Their disciplined investment process and long-term track record gives us confidence in the fund’s long-term prospects. Though as always there are no guarantees.

To find out more about the investment process and performance, please read our latest update.

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Past performance is not a guide to the future. Source: Lipper IM to 31/07/2022.

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