Fund Profile

Disclaimer

Disclosure – Non-substantive Research

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

Overview
A new version of this profile is available. View Latest
Overview

The focus for the team at TR European Growth Trust is to deliver capital growth by investing in smaller and medium-sized companies in Europe (excluding the UK).

At the helm of the portfolio is Ollie Beckett, who uses a bottom-up approach to stock selection, splitting companies based on their stage of the life cycle. Depending on the stage, the manager looks at different attributes, valuation metrics and sell signals to understand if a company is intrinsically undervalued. This unique method not only helps the manager to decipher between different opportunities, but also to diversify the fund’s risk exposure.

2018 was a difficult year for the trust, and the correction in Q4 saw the trust lose 19.9%. However, the trust has rallied strongly in 2019 and has delivered NAV total returns of 15.7% year to date. In comparison the EMIX benchmark has returned 14.4%, while the IA and AIC peer groups have returned 14.1% and 16.3% respectively.

As might be expected in the current European climate, the discount for the trust is extremely wide relative to past history. 2018 saw the trust switch from a premium of 1% to a double-digit discount: at the time of writing the discount sits at 17%. The last time the trust was at this level was during the referendum in 2016.

Kepler View

TR European Growth looks interesting at the present time, with a discount of 17%, the widest it has been since the referendum. Certainly Brexit and the general political turmoil have weighed heavily on the share price. Furthermore, recessionary fears surrounding Germany recently have prompted concern among investors. If the largest EU member state continues to struggle, we could start to see the whole euro area weighed down because of Germany’s close economic relations with other countries. These factors have been even more damaging in the smaller companies space, where the investment proposition might be viewed as more risky.

That said, the story isn’t all doom and gloom. With the ECB’s recent decision to continue with QE, we could see a rally in European smaller companies as they continue to operate in a comfortable haze of steroid driven markets. TR European Growth would likely be one of the first trusts to benefit from this environment, and given the company’s strong long-term track record, the current discount could be viewed as an opportunity. It is easy to forget that in 2016 and 2017 the trust was the standout performer in the peer group, with returns of almost double those of its competitors.

bull bear
Wide discount Manager's value-led approach remains out of favour
Decent level of income that is covered by reserves Still no clarity over Brexit
Low charges
Continue to Portfolio

Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.