LONDON (Alliance News) - TR European Growth Trust PLC said on Tuesday it underperformed against its benchmark for the first half of its financial year, due to poor stock selection, as well as slowing economies.
TR European's net asset value negative return for the six months to the end of December was 21.6%. This compares to a negative return of 13.2% from the Euromoney Smaller European Cos Index (excluding UK) in sterling terms over the same period.
Net asset value per share as at December 31 was 886.01 pence, falling substantially from 1,146.70p as at June 30.
TR European's share price as at December 31 was 774.00p, reflecting a discount to net asset value of 12.6%.
Shares in the Europe-focused investment company were down 2.1% at 854.58 pence on Tuesday.
Despite the challenging period, TR European declared a dividend of 7.50 pence per share, up from 5.00p the year before.
TR European said its six month performance was "very disappointing", attributing the underperformance to mostly cyclical stocks in its portfolio, with financial investments showing double digit underperformances.
In addition, slowing markets had a negative effect on micro-cap companies, to which TR European has considerable exposure.
Economically, European equities suffered from rising US central bank interest rates and the European Central Bank ending its quantitative easing programme in December. European economies continued to slow in the period, with estimates predicting a contraction in the German economy.
"The backdrop of a slowing global economy, many years into an economic recovery has led to fears of recession and a flight from assets perceived to be more risky. However, valuations of European smaller companies have become far more appealing as a result. We do not discount economic risk, but believe that it should not be overstated. A key benefit of close-ended vehicles is the fact that we are not obliged to sell good companies in falling markets in order to meet redemptions," said Chair Audley Twiston-Davies.
