TR European Growth Trust Plc (LON:TRG) invests in a diversified portfolio of small and mid-cap European (ex-UK) companies, with the aim of achieving capital growth. Its manager at Janus Henderson Investors seeks companies that are undervalued as a result of being misunderstood by the market. The portfolio is weighted towards the smaller end of the market cap spectrum, where companies are less well-researched. As recovery has taken hold in Europe, TRG’s recent performance has been exceptionally strong. It has beaten its benchmark, the EMIX Smaller Europe ex-UK index, in share price and NAV total return terms over the last five discrete years to 31 October, and cumulatively over one, three and six months, and one, three, five and 10 years. It also ranks first in its peer group over one, three and five years. TRG actively manages gearing in a range of up to 15% of net assets (13% at end-October 2017), does not tend to hedge currency exposure, and currently offers a dividend yield of 1.2%.
Investment strategy: Diversified small-cap portfolio
TRG is managed on a bottom-up basis, with lead manager Ollie Beckett, assisted by Rory Stokes, employing a range of screens and valuation measures, and attending hundreds of company meetings each year, to identify undervalued stocks with attractive growth or recovery characteristics. The managers select from a universe of c 2,000 broadly sub-€4bn companies across Europe (ex-UK), and hold a diversified portfolio of 140+ companies in order to limit stock-specific risk.
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