TR European Growth Trust
Differentiated option at a significant discount
11 August 2021
TR European Growth Trust (TRG) stands out among its more mid-cap focused peers for being a genuinely small-cap fund with a strong valuation awareness. This has served it well over the past year, and while it has yet to report its FY21 results, over the year to 30 June 2021 it posted share price and NAV total returns of 79.5% and 63.5% respectively, well ahead of comparator indices. The management team (lead manager Ollie Beckett, assisted by Rory Stokes and Julia Scheufler) caution that this was an exceptional year, but long-term annualised returns of c 15%+ underline the validity of TRG’s approach even when its more value-orientated style has largely been out of favour. Despite the strong run of performance, TRG’s shares trade at a double-digit discount to NAV, which has failed to close as it did in the previous period of exceptional performance from Q416 to Q417 (see chart), despite absolute NAV returns having been stronger. MORE »
Back to winning ways
22 March 2021
TR European Growth Trust (TRG) has enjoyed a stellar period of performance since the COVID-19-driven stock market sell-off in March 2020 (beating the benchmark by c 25pp over one year to 28 February 2021), helped by its managers sticking to their valuation-aware investment process, as well as a timely increase in the trust’s gearing. Lead manager Ollie Beckett says the team is optimistic on the prospects for small-cap European stocks – many of which have stronger balance sheets than their large-cap counterparts – as the economy recovers. TRG has a broadly diversified portfolio of c 130 stocks, allowing the managers to look for high-growth micro-caps as well as structural growth stories and recovery plays. Although the trust is now at the top of its peer group for NAV total returns over one and 10 years, it trades at the widest discount to NAV, suggesting significant scope for a re-rating similar to that seen in 2016/17. MORE »
Focusing on valuation and recovery potential
18 May 2020
TR European Growth Trust (TRG) suffered in the recent equity market sell-off for a number of reasons, including its relatively high level of gearing, procyclical bias and structural focus on the smaller end of the European small-cap market. However, by taking advantage of the chance to buy good companies at low valuations, and disposing of holdings whose balance sheets looked vulnerable, manager Ollie Beckett has so far outperformed the EMIX Smaller Europe ex-UK Index since the mid-March lows. The manager argues that while the COVID-19 pandemic may have wide-ranging effects, and an EU-wide approach to rebuilding economies is key to the union’s long-term survival, there are many opportunities for small-cap investors to benefit from the recovery, whatever shape it takes. MORE »
Finding small-cap value opportunities
18 June 2019
TR European Growth Trust (TRG) has seen its share price de-rate substantially over the past 18 months, from a c 3% premium to NAV to a c 15% discount, following a period in which its small-cap value style of investing has been out of favour with investors. However, its NAV has risen c 13% year to date, with lead manager Ollie Beckett taking advantage of depressed valuations in smaller European companies whose growth potential he believes is underappreciated by the wider market. The portfolio is diverse, with c 140 holdings broadly spread by country and industry sector. TRG has a more value-oriented investment approach than its peers and is more exposed to stocks at the lower end of the market capitalisation spectrum, which have greater potential to grow exponentially. The largest positions rarely exceed c 2%, which limits stock-specific risk, while a well-covered c 2.5% dividend yield provides support for total returns in periods of market volatility. MORE »
Finding opportunities in European small-caps
2 July 2018
TR European Growth Trust (TRG) lead manager Ollie Beckett says he and his team are still finding plenty of investment opportunities, in spite of the global bull market in equities arguably being closer to the end than the beginning. The managers focus on attractively valued smaller companies in continental Europe, where improving returns or management changes have not yet been appreciated by the wider market. After a stellar year of performance in FY17 (NAV and share price total returns of +54.0% and +75.5% respectively), recent returns have been more muted relative to the benchmark and peers, and the trust has moved from a slight premium to NAV to a discount, more in line with long-term averages. Beckett has recently taken profits in holdings where valuations looked stretched, and has increased TRG’s gearing to take advantage of a dip in investor sentiment. The stock list is towards the longer end of the historical range. MORE »
Small-cap value focus delivers outperformance
28 November 2017
TR European Growth Trust (TRG) invests in a diversified portfolio of small and mid-cap European (ex-UK) companies, with the aim of achieving capital growth. Its manager at Janus Henderson Investors seeks companies that are undervalued as a result of being misunderstood by the market. The portfolio is weighted towards the smaller end of the market cap spectrum, where companies are less well-researched. As recovery has taken hold in Europe, TRG’s recent performance has been exceptionally strong. It has beaten its benchmark, the EMIX Smaller Europe ex-UK index, in share price and NAV total return terms over the last five discrete years to 31 October, and cumulatively over one, three and six months, and one, three, five and 10 years. It also ranks first in its peer group over one, three and five years. TRG actively manages gearing in a range of up to 15% of net assets (13% at end-October 2017), does not tend to hedge currency exposure, and currently offers a dividend yield of 1.2%. MORE »
Strong returns from European small-cap specialist
17 May 2017
TR European Growth Trust (TRG) has enjoyed an exceptionally strong period of recent share price and NAV performance, posting gains of c 50% over 12 months to 30 April. While returns from all overseas investments have been boosted by the weakness of sterling since the UK’s Brexit referendum, TRG’s outperformance has been assisted by a focus on better-value cyclical stocks, and the decision of lead manager Ollie Beckett to increase gearing in the second half of 2016. The trust invests in European (ex-UK) smaller companies, with a particular focus on those at the lower end of the market cap spectrum, where both rewards and risks may be higher. Because of this, TRG has a longer stock list than peers. While the discount to NAV has narrowed somewhat, it remains at c 9% compared with an average of 0.7% for the investment company universe. MORE »
Finding value in European small-caps
20 June 2016
TR European Growth Trust (TRG) holds a diversified portfolio of European (ex-UK) small and mid-cap companies, with the aim of achieving long-term capital appreciation. Set up in 1990, the trust has been managed by Ollie Beckett (assisted by Rory Stokes) at Henderson Global Investors since July 2011, over which time it has comfortably beaten the benchmark Euromoney Smaller Europe ex-UK index in share price and NAV total return terms, as well as outperforming larger-cap European stocks and the FTSE All-Share index. The portfolio is biased towards value situations and companies at the smaller end of the market cap spectrum. While focused on capital growth, the trust has also grown its ordinary dividend by a compound 15.5% a year over the past five years. MORE »
Diversified approach to small-cap Europe
29 October 2015
TR European Growth Trust (TRG) is an established investment trust investing in small and mid-sized continental European companies. Managed by Ollie Beckett at Henderson Global Investors since July 2011 (assisted by Rory Stokes from 2013), its principal aim is to achieve capital growth, although it also has a long record of year-on-year dividend growth. TRG has a longer stock list than its peers, driven by its focus on companies further down the market capitalisation spectrum, where greater diversification may be advised. This focus on the smaller end of the market (as well as a small exposure to unquoted companies) means performance may diverge from that of the benchmark; the trust has outperformed the Euromoney Smaller Europe ex-UK index in four of the last five 12-month periods to 30 September in both NAV and share price total return terms. MORE »
