European Smaller Companies (ESCT)

European Smaller Companies (ESCT) has an impressive short and long-term track record of capital growth from a diversified Portfolio of European smaller companies. Over a decade where European large caps have outperformed small caps at an index level, ESCT has outperformed both, with an 11% annualised NAV total return compared to just under 9% for large and 8% for small caps.

In 2025, ESCT adopted an enhanced Dividend policy, using a combination of revenue and capital to pay 5% of NAV each year, leaving the management team free to focus on capital growth. It has taken a year for the full impact of ESCT’s higher yield to be reflected in industry data, and at the time of writing, ESCT’s 9% Discount and 5.7% dividend yield suggest that not all investors have woken up to the higher yield.

Although in the Portfolio section we discuss how manager Ollie Beckett and his colleagues have positioned the trust to be overweight in, for example, Sweden and Germany, to lean into the rich opportunity set of Europe’s industrial companies, and to lighten up on financials, ESCT can really be thought of as a portfolio of 100 or more companies operating in such a wide variety of niches that it’s not always possible to say performance comes from one or more macro trends. It’s true that many portfolio companies do benefit from those, but ESCT also takes positions in recovery stories and in companies operating in unexpected niches where success may be unrelated to, or even in spite of, a macro trend.