LONDON (Alliance News) - European Assets Trust NV's investment manager, F&C Investment Business Ltd, Friday described a "confusing but ultimately positive first half" as it underperformed its benchmark.
According to the investment manager's review, the trust's benchmark, the Euromoney Smaller European Companies (ex UK) Index, rose by 10.8% in euro terms on a total return basis in the six months ended June 30. In sterling terms, the index's total return was 6.6%. The total return statistics exceeded those of the trust, which reported a 6.6% net asset value per share total return in euro terms and 2.5% in sterling.
Lead Investment Manager Sam Cosh said that the poor relative performance in the year to date can be attributed to a combination of investment style and some difficult stock performances. He said that an be demonstrated by exposure to Italy, which contributed to the majority of the underpeformance. Cosh said that the trust had "sufficient exposure" to Italy but that its positions performed poorly relative to the benchmark.
"While we can be happy that we have moved the NAV forward in total return terms at 2.5%, this is also disappointing as it has materially lagged the benchmark. However, given our high conviction investment style focused on quality businesses we must accept and indeed expect poor periods of relative performance, especially during strong markets," Cosh said in the review.
"Indeed we have counselled our shareholders to expect performance less volatile than the market through the cycle, with an emphasis on capital preservation as well as capital growth. With this strategy it should be no surprise to lag a strong market, particularly when this has been led by lower quality assets. Indeed one of the characteristics of our recent performance that has been surprising is that we have managed to perform well in such a strong market since the recovery in European equities," Cosh added.
The trust's shares were Friday down 1.1% at 929.66 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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European Assets Trust (EAT)
