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BlackRock European Dynamic
BlackRock European Dynamic invests in companies of all shapes and sizes across Europe. Given the size of the fund, it is relatively concentrated at around 50 stocks. Manager Giles Rothbarth has a flexible approach, looking for companies that are either undervalued and/or have good growth potential across different time periods.
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Giles Rothbarth is a Director and fund manager at BlackRock, where he is part of the European equity team within the Fundamental Equity division of the Active Equities platform. He co-manages the BFM Continental European Fund, the BFM European Dynamic Fund, and the BGF Continental European Flexible Fund.
Giles Rothbarth is a Director and fund manager at BlackRock, where he is part of the European equity team within the Fundamental Equity division of the Active Equities platform. He co-manages the BFM Continental European Fund, the BFM European Dynamic Fund, and the BGF Continental European Flexible Fund.
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Company Description
A part of the US-based BlackRock Group, BlackRock manages assets across equity, fixed income, cash management, alternative investment and real estate strategies. It provides this comprehensive range of products across numerous continents with more than 130 investment teams in 30 countries.
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Quote from the Fund Manager
Ultimately, I like franchises whose 2-3 year earnings power is fundamentally under appreciated by the market.
Giles Rothbart
Lead Manager
Investment process
Giles’ focus is on companies that are likely to surprise positively in terms of earnings and growth. The fund is unconstrained with regard to company size and sector. It invests in companies with medium to long-term earnings power that is greater than the market, and also those in restructuring and turnaround situations. The approach is flexible, varying through market and economic cycles to position the portfolio appropriately. The portfolio typically holds between 35 and 65 stocks.
The manager uses a range of externally-sourced and proprietary screening tools to help filter the investment universe and identify ideas for further in-depth research. Research is central to the investment process and a key source of alpha for the fund. The team has a structured framework in place that includes a proprietary research template that provides a comprehensive and consistent framework for each stock containing price target and rating.
Analysts are expected to look for new ideas as well as cover existing holdings, but not to spend time on maintenance research. Portfolio managers have exceptional access to senior management within the companies they invest, conducting hundreds of meetings every year.
Risk
Single stock weightings are typically 2-3% below or above the benchmark weighting to make sure risk is not dominated by any particular stock. Giles employs a strict sell discipline, setting price targets early in the process to ensure he doesn’t fall in love with his stocks.
Daily reports generated by BlackRock’s extensive proprietary risk management systems allow the portfolio managers to intensively analyse their portfolio risk. Full stress test scenarios and detailed risk analytics allow the manager to position the portfolio in a fully intentional way. Transparency with the risk and quantitative analysis group helps ensure that no area of portfolio risk goes unseen.
ESG
ESG - Integrated
Blackrock’s well-resourced European team has a consistent and sophisticated ESG analysis system built into the investment process. It has specific risk inputs undertaken by analysts, and the output is highlighted as a prominent section of the stock research template. The key risks revolve around governance - such as audit quality, executive pay and ownership structures. There are also environmental factors on toxic emissions and waste, and social concerns on factors such as labour management. Specific scores are provided on each stock for other key ESG issues, such as carbon metrics, which are provided by third-party data. These scores do not preclude investment, with Giles having flexibility to choose, but the inherent risks are made very prominent. Giles’ preference for companies with strong long-term prospects mean those with considerable ESG risks, particularly governance, are unlikely to be a feature of the portfolio.
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