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London, UK, 8 March 2023
Edison issues update on European Opportunities Trust (EOT)
European Opportunities Trust's (EOT's) manager, Alexander Darwall, invests in globally focused companies with unique technologies, comparative advantages and multiple growth channels, with the aim of constructing a resilient portfolio capable of generating capital growth in all economic climates. This strategy has delivered positive returns and outperformance over the long term; in the 10 years to end February 2023, the portfolio has made an average annualised return of 9.1% in NAV terms, compared to a benchmark return of 8.1% on the same basis. Nearer-term performance has been disappointing, and the share price discount has widened, despite the fact that most of EOT's portfolio holdings are performing well. Manager Alexander Darwall expects positive news from several of his 'special' companies over the coming year, which should boost performance, and he is confident his strategy and patience will continue to pay off for shareholders over the longer term.
Investors may be attracted by the manager's stock selection skills, which are manifest in the trust's record of long-term capital growth and outperformance. EOT's particularly strong outperformance at times when the market is emerging from crises may be reassuring for investors unnerved by the past year's unusual, challenging events and volatility. The manager's focus on innovative, world-leading, growth-oriented companies may appeal to those keen to invest in 'tomorrow's winners', developing game changing drugs, agricultural products and consumer services, and benefiting from rising demand for sustainable fuels and semiconductors. EOT's historically wide 13% share price discount (vs 4% long-term average) has scope to narrow if performance improves and/or as investors come to appreciate the relative value EOT's shares offer at their current historically wide levels. In the meantime, investors may see an ideal opportunity to gain exposure to high-quality, growth-oriented stocks at a discount. EOT's focus on capital growth means that it does not receive, or pay, significant dividends. This low-dividend policy may detract from the trust's appeal for those requiring regular and attractive income.
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