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Hibbert’s BlackRock European Dynamic fund set for soft-closure

Introductory charges on the fund are set to be raised on 7 November in an attempt to discourage inflows.

Jenna Voigt

By Jenna Voigt, Features Editor, FE Tru...
Wednesday September 04, 2013

FE Alpha Manager Alister Hibbert’s five crown-rated BlackRock European Dynamic fund is the next in a wave of funds set to close to new investors this year.

From 7 November, the £1.96bn fund will introduce higher introductory charges for both intermediaries and private investors in an effort to control its size.

ALT_TAG The announcement comes as investors begin to become more positive on Europe, thanks to improving economic growth in the region.

BlackRock European Dynamic has taken on more than £200m in inflows in the last six months, the third-highest figure in the IMA Europe ex UK sector, and in the interest of portfolio liquidity the group is attempting to discourage new business.

"These measures are designed to protect the interests of existing investors by ensuring the fund can continue to be managed in accordance with their respective mandates," BlackRock said.

From 7 November the BlackRock European Dynamic fund will be closed to new money, with the exception of regular savers who will be able to continue putting money in with the same charging structure.

The A and D share classes will be closed and replaced by new unit classes labeled FA and FD. Intermediaries subsequently investing in the FA or FD classes will pay a 1 per cent initial charge, while direct investors buying the FA share class will pay up to a 5 per cent charge, which will be paid directly into the funds.

The firm plans to close the entire strategy if it reaches £2.5bn.

As the name suggests, the fund is a dynamic portfolio, meaning it tends to have a higher level of turnover than other long-only funds and is more likely to close with a smaller amount of assets under management than funds with a buy-and-hold strategy.

Because Hibbert (pictured above) tends to trade stocks more often, liquidity can be of greater concern if he becomes unable to move in or out of positions in the portfolio.

The BlackRock European Dynamic fund has been a standout performer in the IMA Europe ex UK sector over the medium- and long-term.

Since Hibbert took the helm of the fund in March 2008, it has nearly quadrupled the returns of the sector, picking up 86.98 per cent, and surpassed the FTSE Europe ex UK index by even more. The index returned just 21.4 per cent over the period.

Performance of fund vs sector and index since 2008


Source: FE Analytics

In spite of the fact that the Dynamic fund has a higher turnover than its peers, it actually operates with a lower risk premium.

Over the last five years, the fund has the third highest Sharpe ratio in the sector, at 0.43, behind the FF&P European All Cap Equity fund and Threadneedle European Select.

It has, however, been marginally more volatile than its peers, with an annualised score of 24 per cent over the five years since Hibbert took over the fund. The sector and index scored roughly 23 per cent over this period.

Consumer products and financial stocks are the joint highest sector weighting in the fund.

Hibbert chooses stocks on both a growth and value bias, searching for names that can deliver growth over various market conditions.

Among the fund’s top holdings are Swiss pharmaceutical giant Roche, Danish healthcare firm Novo-Nordisk and French pharmaceutical company Sanofi.

Until the soft-closure date, the fund requires a minimum investment of £500 and has ongoing charges of 1.67 per cent.

BlackRock European Dynamic is one of four funds in BlackRock’s European equity range that the firm is discouraging inflows into, the others being Hibbert’s offshore BlackRock Global Funds Continental European Flexible portfolio, as well as Vincent Devlin’s BlackRock Strategic Funds European Absolute Return and BlackRock European Absolute Alpha funds.

Earlier this year, Fidelity announced it would close FE Alpha Manager Alex Wright’s Fidelity UK Smaller Companies fund to new money, while First State and Aberdeen have put barriers to entry on their leading emerging market portfolios. Troy has also closed Francis Brooke’s Trojan Income fund to new money.

Read FE Trustnet tomorrow for our analysis on alternatives to the BlackRock European Dynamic fund, aside from the obvious choices of Jupiter European and Threadneedle European Select.


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Data provided by FE. Care has been taken to ensure that the information is correct, but FE neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.

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