Wealth Shortlist Update: BlackRock Continental European Income

Andreas Zoellinger is due to step down as co-manager of the BlackRock Continental European Income fund at the end of 2024 and retire from BlackRock and the fund management industry in early 2025. Until then, he’ll remain a manager alongside Brian Hall and Stuart Brown. Hall and Brown will remain co-managers after his departure.

Hall started his investment career in 1999 and became co-manager of this fund in March 2021. He joined BlackRock in 2007 and has worked with Zoellinger within the European equities team throughout this time. He has a long track record of investing in European companies, and he has focused on value companies – those that have been through a tough time that the manager believes is temporary or where the share price doesn’t reflect the future potential. This style is complementary to income investing.

Brown joined BlackRock and became a co-manager of this fund in July 2024. This was done in anticipation of Zoellinger stepping back, to ensure sufficient resource and experience are in place to manage the fund after his departure. He previously spent 11 years at abrdn and has managed European income funds since January 2021.

As a reminder, this fund aims to provide investors with an attractive income alongside growth in their investment, by investing in European companies (excluding the UK). The fund can be quite concentrated and, whilst it mostly invests in large companies, it has the ability to hold smaller companies too – both these things can add risk. Fees are taken from capital. Whilst this will maximise income, it can limit the potential for capital gains.

We think the fund could work well in an investment portfolio focused on income or provide diversification to European and other global funds focused on growth. The managers also aim to provide some resilience during turbulent market periods, which could provide some balance in a more adventurous portfolio.

Our view

We’re disappointed to see Zoellinger step down from the fund and depart the business – he has worked at BlackRock since 2001 (including his time at Merrill Lynch Investment Managers, which merged with BlackRock), is a highly experienced investor and is respected by the team at BlackRock.

That said, we feel the fund will be left in good hands. In addition to this fund, Hall’s managed the BlackRock GF European Value fund since December 2010. While the European Value fund is not income-focused, it has overlap in some of its investments as well as the investment approach used.

Hall has also worked closely with Zoellinger as part of the same team for many years, which means he is familiar with the fund and investment approach used. They also make use of the same European equities team at BlackRock, in which other European equity fund managers and analysts provide insight and investment ideas for this fund. This means it’s not only down to the co-managers to ensure the success of the fund, and idea sharing, challenge and debate are encouraged throughout the team.

Appointing Brown ahead of Zoellinger’s departure means there’s a suitable handover process and transition period. It provides Brown with a chance to work with the existing co-managers and ensure he’s familiar with the fund, its investments, and the process.

We think the manager change on this fund has been handled well by BlackRock, providing the remaining co-managers and team time to settle before Zoellinger leaves, and investors time to consider the implications.

We maintain a positive view of the fund, helped by a well-planned transition, the fact the fund remains in solid hands with Hall, and that the fund continues to have the support of a well-resourced and experienced European equities team. There will also be continuity in the investment process. For these reasons, the fund retains its place on the Wealth Shortlist. We’ll monitor the fund closely though, including continuing to get to know the new co-manager and monitoring any changes that are made to the fund.

Investors can read more about the fund, its investment and performance in our latest fund update.

Past performance is not a guide to the future. Source: Lipper IM to 31/08/2024.

More on BlackRock Continental European Income, including charges

BlackRock Continental European Income Key Investor Information