TR European Growth Trust Plc (LON:TRG) lead manager Ollie Beckett says he and his team are still finding plenty of investment opportunities, in spite of the global bull market in equities arguably being closer to the end than the beginning. The managers focus on attractively valued smaller companies in continental Europe, where improving returns or management changes have not yet been appreciated by the wider market. After a stellar year of performance in FY17 (NAV and share price total returns of +54.0% and +75.5% respectively), recent returns have been more muted relative to the benchmark and peers, and the trust has moved from a slight premium to NAV to a discount, more in line with long-term averages. Beckett has recently taken profits in holdings where valuations looked stretched, and has increased TRG’s gearing to take advantage of a dip in investor sentiment. The stock list is towards the longer end of the historical range.
Investment strategy: Small-cap value and growth
TRG follows a bottom-up investment strategy, with the managers using a range of screens and valuation measures, and meeting hundreds of companies each year in their search for undervalued stocks with attractive growth or recovery characteristics. The trust holds a diversified portfolio of c 120-150 stocks from an investment universe of c 2,000 broadly sub-€4bn companies across continental Europe, and has a bias to the smaller end of the market, with 82% of holdings (including the effect of gearing) having a market cap below €2bn.
To read the entire report Please click on the pdf File Below: