Eastern European trust remains comfortably ahead of its benchmark in the year to end July, although the defensive skew of the portfolio underperformed last month.
The trust returned 7.3% in net asset value (NAV) terms in July, against 8.4% from the MSCI EM Europe 10/40 index.
Manager Sam Vecht from BlackRock noted the trust’s underweight position in the rising Polish market as being detrimental, although light exposure to Russia partially offset this.
During July, he reduced the overweight in Hungary and added to holdings in Turkey.
“Emerging European equities remain attractive on low valuations compared to other markets,” adds Vecht.
“Corporate earnings growth will be strong in 2010 as companies recover from the credit crisis and there is further upside from upgrades to forecasts.”
His portfolio is overweight Hungary and the Czech Republic as the team see concerns that Hungary may be the next Greece, as being overdone. (article continues below)
In addition, Vecht says the currencies of Hungary, the Czech Republic and Poland are cheap.
“We remain underweight Turkey, where we have been concerned about the impact of higher inflation,” he says.
“However, following better-than-expected recent data, and the global disinflationary trends, we have reduced this underweight.”