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LONDON (Alliance News) - European Assets Trust NV Tuesday said its net asset value total return in sterling terms reached 7.6% in the first three months of 2014, providing an absolute return but performing below the benchmark.
The trust's total return in the three months ended March 31 lagged the 8.6% returned by the Euromoney European Smaller Companies (ex UK) Index. Net assets increased to GBP198.0 million from GBP174.0 million over the course of the quarter.
In a statement, European Assets Trust, which has an objective of achieving capital growth through investment in quoted small and medium-sized companies in Europe, excluding the UK, said European smaller companies "continued their strong momentum" in the opening three months of 2014 "again significantly outperforming" their larger counterparts.
European Assets Trust, which had a combined exposure of 40.5% of its net assets to Germany and Ireland at the end of March, said European equities have moved "a long way" since the summer of 2012 and are no longer "obviously" cheap.
"In addition, smaller companies are trading at a small premium to the market as a whole. However, we are encouraged by signs of improving economic activity within the region which should ultimately lead to improvement in earnings that are still significantly below previous peaks," European Assets Trust said in a statement.
"Corporate activity remains another strong potential driver as this is also significantly below historical levels. Smaller companies can benefit disproportionately from both these trends, being more exposed to domestic European growth and of course acquisition activity," the trust said, adding that it continues to look forward "with confidence" but believe companies will have to deliver "improving earnings" to drive the market higher from here.
European Assets Trust shares were Tuesday quoted at 999.70 pence, up 0.7%.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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