BlackRock Continental European Income Fund

The fund is different to pure growth orientated funds and is best summed up as capturing steady growth and low risk cash returns from high quality companies.

Since Draghi’s ‘do whatever it takes’ speech in 2012 the markets have become less worried about the collapse of the Euro and peripheral economies. There is a greater confidence around political stability in Europe.

However, investors continue to be wary of Europe which is reflected in negative inflows over the last five years. Towards the end of 2013 the outflows reduced and although still negative in aggregate it continues to narrow. As a consequence we are seeing more European fund managers on the road explaining why now is the time to invest.

We have recently met growth fund managers specialising in Europe but failed to find anything which stands out. However, after meeting the manager of the Schroders European Alpha Income Fund it highlighted that funds which can combine growth and sustainable growing dividends can significantly outperform pure growth plays.

Income not only helps provide downside protection but is also an important of the overall return. With greater volatility in the market these funds can form an important of an individual’s portfolio if they combine growth with income.

We believe that the Schroders European Alpha Income Fund is a hidden gem however it does carry risks especially around calling the cycle and for some investors this may not appeal. We recently met the team behind the BlackRock European Continental European Income Fund. This fund may act either as an alternative option or a counter balance to Schroders. The performance is strong, it is a concentrated portfolio of currently 42 stocks and the top ten stocks make up 33% of the fund showing strong conviction traits although no one stock dominates.

Fund Facts Morningstar

Notes

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