To:          RNS

From:    European Assets Trust PLC ("the Company")

LEI:         213800N61H8P3Z4I8726

Date:     4 January 2024  

Dividend announcement

Highlights

·    Continued policy of six per cent dividend per share on year-end net asset value for annual distribution to shareholders.

·    Based on the unaudited net asset value of 98.3 pence per share for 31 December 2023, the total dividend declared for 2024 will be 5.9 pence per share, an increase from 5.8 pence paid in 2023.

·    Dividend to be paid in four equal instalments of 1.475 pence per share in January, April, July and October 2024.

Dividend for 2024

The Board confirms that the Company's stated and long-standing distribution policy of declaring, barring unforeseen circumstances, an annual dividend equivalent to six per cent of the net asset value per share at the end of the preceding year will be continued in 2024.

2023 has been a volatile year for markets with interest rate expectations again driving market direction.

The net asset value per share as at 31 December 2023 was 98.3 pence (31 December 2022: 96.5 pence). As the net asset value per share ended the year higher this results in an increased total dividend payable by the Company for 2024 of 5.9 pence per share (2023: 5.8 pence per share).

The 2024 dividend will be paid in four equal instalments of 1.475 pence per share on 31 January, 30 April, 31 July and 31 October 2024.

The January dividend payment of 1.475 pence per share will be paid to shareholders on 31 January 2024, having an ex-dividend date of 11 January 2024 and a record date of 12 January 2024.

Investment Performance and Review

The Company's net asset value total return (capital performance with dividends reinvested) per share was +8.2 per cent in Sterling (+10.8 per cent in Euros) (unaudited) for the year ended 31 December 2023. Sterling share price total return for the year was 4.9 per cent (7.0 per cent in Euros). These compare with the Benchmark⁽¹⁾, which produced a total return of +9.8 per cent in Sterling (+12.4 per cent in Euros).

Macroeconomic news continued to dominate in 2023. The year began with optimism that Europe would continue to lead global equities higher, with China providing further impetus to an improving outlook. Unfortunately, this proved to be a false dawn as the Chinese economic re-opening momentum stalled. This was particularly bad news for the Eurozone, which earns more of its GDP through the export of goods than most other major advanced economies. Rising interest rates also started to bite in earnest, pushing European economic indicators lower.

Frustratingly, inflation also stayed more persistent than expected, dampening optimism that interest rates would start to fall and causing the European Central Bank and the US Federal Reserve to signal that rates would stay 'higher for longer'. This pushed long-term bond yields higher and global equity markets significantly lower in the third quarter of the year.

The year, however, ended on a much more positive note as softening inflation and job market data prompted a more benign appraisal of interest rates leading to a rally in November and December.

In a tightening liquidity environment, smaller companies underperformed their larger counterparts for the second successive year. Global market leadership was driven by a select group of companies in the US and by the emergence of two dominant themes; Generative Artificial Intelligence and a class of weight loss drugs called GLP-1s. We have exposure to both themes within the portfolio through holdings in semiconductor equipment producers and pharmaceutical packaging companies. However, the strength of these performers was not sufficient to drive outperformance of our Benchmark.

Despite delivering a positive net asset value total return that compared well with our peer group, it is disappointing to relatively underperform our index. There are, however, reasons for optimism, including the benefits of further integration of Columbia Threadneedle Investment's businesses. The wider investment team, now based at a single London location, has access to a greater pool of research talent which is being reflected in the portfolio through greater idea generation and an increasing number of portfolio holdings. Additionally, the attractive valuations of European smaller companies, following the October sell-off, led us to increase gearing levels within the portfolio and benefit from the more positive market conditions experienced towards the end of the year. We believe the portfolio is now well positioned for the future as we seek to build on the more recent relative and absolute outperformance.

For further information contact:

Sam Cosh (Investment Manager)                                                             Tel 0131 573 8300

Scott McEllen (Company Secretary)                                                         Tel 0131 573 8300

Columbia Threadneedle Investment Business Limited

(1)   With effect from 1 June 2023 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding United Kingdom Small Mid Cap (Net Return) Index. For the year ended 31 December 2023 a time-apportioned composite of both indices has therefore been calculated and disclosed.