European Assets (EAT)

European Assets (EAT) invests in European mid- and small-cap companies, emphasising high-quality companies with strong market positions. The portfolio is broadly diversified, with the top ten making up about a quarter of the whole and while the portfolio is constructed stock by stock, themes emerging from this include energy transition, digitisation, and deglobalisation, which help to frame the assessment of the growth opportunity. Recently, the rise in defence spending in Europe has also developed as an investment theme.

Mine Tezgul was appointed as portfolio manager in May 2024, having been with Colombia Threadneedle since 2019. Her deputy manager, Philip Dicken, is also head of International equities and they are supported by two dedicated small-cap analysts withing the 22-strong Pan-European equities team. While the personnel change does not mark a fundamental change in style, the team has taken the opportunity to reassess the portfolio and to make some changes in emphasis, such as taking a more disciplined approach to valuations.

Over the last five years to the end of February 2025, EAT has delivered NAV and share price total returns of c. 25% and 29% respectively, compared to the benchmark’s c. 47% total return. Rising interest rates in 2022 partly account for this, together with some stock selection issues. We look at this in more detail in the Performance section.

EAT pays quarterly Dividends, calculated as 6% of NAV, with the total for the year ending 31/12/2025 set at 5.52p, a c. 6.7% yield at the current share price. Under Mine’s tenure, EAT’s gearing has risen from neutral to 7% and this could rise further if the team believe markets are becoming more settled. EAT’s Discount of c. 12% is wider than the five-year average and could represent a value opportunity for investors.