Fund Profile

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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
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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
2025 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

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20 Dec 2024 The little trust that could
A plucky performance saw this small cap trust end the year ahead of a strong pack in our annual top picks challenge...
09 Dec 2024 Monthly roundup: updates from the property sector, our income event and digital infra news
Jo, David and Ryan discuss the latest news, reviews and interviews in the investment trust world...
20 Nov 2024 Big wheels keep on turnin’
The US election throws up several investment ideas from the mainstream to the more idiosyncratic...
27 Sep 2024 Fund Analysis
ESCT shows how to perform well even when market sentiment is weak...
28 Aug 2024 Dream team
Our analysts review how their fund picks for 2024 have done…
22 Jul 2024 Overseas equities: more bang for your buck (pound)?
Isn't it nice to talk about something that isn't 'interest rates'?
15 May 2024 Why'd you have to go and make things so complicated?
European growth may be more complicated, and positive, than we suspected...
03 Jan 2024 Probably better asking an octopus
Our investment trust experts uncurl a tentacle each and choose their ‘top picks’ for 2024…
17 Nov 2023 Fund Analysis
ESCT’s manager follows the returns not the crowd...
09 Sep 2021 What next for European equities?
After a strong period for European equity markets, we ask whether this trend can continue…
20 May 2020 Fund Analysis
Utilising a unique process, TRG offers a value-tilted portfolio of smaller European companies…
09 Jan 2020 Full house
The KTI team’s ‘top picks’ for 2019 have delivered strong results…
30 Sep 2019 Fund Analysis
TRG looks to deliver strong capital returns through a portfolio of some of Europe’s most exciting opportunities…
24 Apr 2019 Nothing compares to EU
Currently one of the financial world's most unloved regions, we look at the sectors that are unique to Europe and how the persistent pessimism has presented attractive opportunities…
02 Jan 2019 Fund Analysis
A value-led strategy which aims to deliver capital growth through investing in small and medium-sized companies in Europe...
31 Dec 2018 Ladies, gentlemen and non-binary persons, start your engines…
With Britain only months away from the bright, sunlit uplands of Brexit and America officially ‘great’ again, we present our best ideas for what looks set to be a fascinating year…
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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.