BlackRock Merges Emerging Europe and Frontiers Trusts

BlackRock Emerging Europe is being liquidated and shareholders will have their investment rolled into BlackRock Frontiers 

Lena Tsymbaluk 20 August, 2018 | 8:47AM
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On August 17, 2018, the board of BlackRock Emerging Europe (BEEP) announced their plans to put the fund into liquidation.

This follows the proposed tender offer in June 2018 when investors voted to sell 61% of its shares, leaving the investment trust too small to continue in the opinion of the board. As a result, the board decided not to proceed with the tender offer and instead reviewed options available.

It will be putting the fund into voluntary liquidation and offers shareholders the option of electing for any combination of: receiving cash at net asset value less costs and rolling their investment into new C shares to be issued by BlackRock Frontiers investment trust (BRFI).

BlackRock Frontiers Ord is a different proposition to this trust, offering frontier-markets exposure. However, the Bronze Rated BGF Emerging Europe open-end fund, domiciled in Luxembourg, is not affected by the change. It continues to be managed by Sam Vecht with the same approach.

We believe this is a viable alternative for investors who can access such a vehicle. Given the trust will no longer be a continued investment proposition, we are moving it to a Morningstar Analyst Rating of Neutral.

In Focus: BlackRock Frontiers

BlackRock Frontiers is currently rated Neutral following a change in the remit and benchmark in June. We have a high opinion of managers Sam Vecht and Emily Fletcher, who have extensive knowledge of frontier markets. Vecht assumed responsibility of the strategy at its inception in Dec 2010. Fletcher’s role as co-manager was formalised in May 2013, although her involvement extends back further. The pair is supported by emerging markets team consisting of more than 40 members.

From April 2018, the board voted to widen the fund’s remit to include some emerging-market countries. The reason for this is the constant evolution of the MSCI Frontier Markets index and continuous reclassification of frontier countries into emerging.

For example, UAE and Qatar were reclassified as emerging markets in 2014, followed by Pakistan in June 2017. The investment team together with the board have decided to expand the universe in order to create a stable, consistent universe.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BGF Emerging Europe A233.41 EUR-37.67
BlackRock Frontiers Ord155.00 GBX-0.64Rating

About Author

Lena Tsymbaluk  is a fund analyst at Morningstar.

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