BlackRock sticks with emerging Europe strategy

BlackRock has maintained its positions in the £2bn BlackRock global funds emerging Europe fund despite suffering losses of over 17 per cent over three months, as other Europe managers react to recent volatility.

The fund lost 17.4 per cent over the three months to September 1, according to Morningstar.

BlackRock head of emerging Europe Sam Vecht, who manages the fund, says he is more concerned with its longer-term performance and is confident in the countries the fund invests in.

He says: “We invest in a one to two-year timeframe, so we do not look at performance over the shorter three-month period. There has been some poor stock selection in terms of the companies we chose in Russia but on a country basis we have been right.”

In contrast, Baring Asset Management has moved up the cap scale in response to the volatility in the equity markets. The £333.3m Barings German growth trust has lost 20.5 per cent over a three-month period to 1 September 2011, according to Morningstar.

The fund has traditionally been split evenly between large and small cap but manager Robert Smith has increased the large-cap weighting to 55 per cent, with small cap falling to 45 per cent.

He says: “The German market fell by 30 per cent in the two weeks at the beginning of August. The market is already pricing in some kind of recession and therefore it is a fantastic time to buy.

“The tilt of the portfolio has edged more towards large-cap because when the market improves, large caps tend to outperform briefly as these type of stocks are the first point of call for investors like hedge funds.”