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BlackRock European Dynamic - growth potential in luxury brands

Kate Marshall | Wed 03 July 2019

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • A different approach to investing in Europe
  • Run by a manager with a strong long-term track record
  • Luxury goods companies are a current area of focus

Our view

We think BlackRock European Dynamic is different to many other funds investing in Europe.

Alister Hibbert and Giles Rothbarth, the fund's managers, consider what's going on in the wider economy and how this could affect different industries and companies. When their views change, they're prepared to change how the fund's invested quickly.

We like this flexible approach. It's led to good long-term returns. It's a more aggressive style compared with some other managers though, and the fund's performance has been volatile at times.

We think the fund's a good choice for exposure to European stock markets. But there are a number of great fund managers in the European sector and we feel we already have a good line up of funds on the Wealth 50, which are available at lower charges.

A good track record

Alister Hibbert took over BlackRock European Dynamic in March 2008 and it's since performed much better than the broader European stock market. While the FTSE World Europe ex UK Index has grown 80.2%*, the fund's more than doubled this return and grown 193.0%. Please remember past performance isn't a guide to future returns. The fund will fall as well as rise in value, so you could get back less than you invest.

Annual percentage growth
May 14 -
May 15
May 15 -
May 16
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
BlackRock European Dynamic 10.6% 0.5% 31.6% 7.8% -3.0%
FTSE World Europe ex UK 4.7% -3.7% 35.7% 0.9% 1.8%

Past performance is not a guide to the future. Source: *Lipper IM to 31/05/2019

The past year's been a bit tougher though, especially during the last few months of 2018.

At the time, there were growing concerns about the global economy and whether it might be headed for recession. So a lot of investors focused on companies they expect to be more stable during uncertain times, like utilities and telecoms companies.

The fund didn't have as much invested in this type of business. Instead it had more exposure to sectors that tend to be more sensitive to the health of the economy, such as industrials and technology, which held back returns.

It's been a different story so far this year. Industrial companies, which make up 30% of the fund, have done better. This includes aerospace and defence company Airbus, chemicals company Sika, and DSV, which provides transport services.

Area of focus: luxury brands

Luxury goods companies have been a staple part of the fund for some time. Think Ferrari, Remy Cointreau, and LVMH, which owns brands including Moet and Louis Vuitton.

The managers think the power of these brands could lead to long-term success. Many are well-established companies with a global footprint, which keeps them one step ahead of the competition. They're well-known for their high-quality products, and associated with wealth and status. This makes their products increasingly desirable, especially in countries where household incomes are rising, such as emerging markets.

Overall, the managers focus on companies they think can grow their earnings and cash flows over the long term. Other examples include Straumann, which makes dental implants and other innovative dental treatment solutions. The company's already taken a greater share of the dental market over the past few years, and the managers think it'll continue to grow by expanding across more countries and acquiring other businesses.

The fund currently invests in a relatively small number of companies, which means each one can have a significant impact on performance, though it increases risk.

Find out more about the fund, including charges and how to invest

Key information document

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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