JPMorgan European Discovery (JEDT)

JPMorgan European Discovery Trust (JEDT) is a high-conviction portfolio of c. 70 European smaller companies, targeting capital growth across a broad range of sectors by focusing on under-researched businesses with the potential to grow faster than many large companies.

JEDT’s current management team took the helm in March 2024 and while JEDT’s fundamental proposition remains capital growth from European smaller companies, the team have refined the process and their focus in primarily on stock picking, which analysis shows has been the main source of outperformance under their tenure. Running a 70-stock portfolio means that even the largest positions are between 2% and 3% of NAV, which is a sensible risk control in an asset class that can be volatile. Additionally, many larger holdings are not just a mirror of the benchmark, and therefore the portfolio has a high ‘active share’. The refreshed approach has delivered strong returns, and since the beginning of March 2024, JEDT’s NAV and share price have risen 27% and 32% respectively, outperforming the benchmark’s 19% (figures to 16/03/2026).

Over the same period, JEDT’s discount has narrowed to c. 8%, assisted by the above-mentioned strong performance combined with a steady approach to share buybacks. Whereas the trust’s own discount is therefore relatively narrow, the team argue that European small-caps are at a valuation discount to large-caps, which undervalues their greater potential for growth, and there have been long periods in history when small-caps have traded at a premium.

JEDT currently yields 2.2%. JEDT primarily targets capital growth and the managers are not constrained by an income target, with the dividend policy to pay out substantially all revenue each year.