European Assets Trust Regulatory News (EAT)

London, UK, 8 November 2022

Edison issues update on European Assets Trust (EAT)

European smaller companies' funds focused on growth investing have had a torrid 2022 as soaring inflation, rising interest rates, cost of living pressures and slowing economic growth have prompted increasing investor risk aversion, resulting in a dramatic sell-off for long-duration growth assets. European Assets Trust (EAT) has not been immune to such pressures despite its focus on growing, high-quality, well-capitalised and modestly indebted companies. In our last update, Well placed to deliver further capital growth, we made the case for the EAT's place in this niche area of investment. Performance of the asset class has since deteriorated further, with the possible headwinds for European smaller companies strengthening. However, investors can take comfort in the investment process established by experienced fund managers Sam Cosh and Lucy Morris, which they have used here since 2011 to good effect.

Arguably, 2022 has not provided the most supportive environment for equities and for European smaller companies in particular. However, it is always darkest before dawn and the current de-rating in the asset class may well present a contrarian opportunity for the long-term investor. EAT has been investing in a portfolio of high-quality, dynamic growth businesses for more than 50 years, through a variety of economic conditions. The focus on good-quality companies, which should be relatively well-placed to pass on increased costs, counter margin pressures and take advantage of opportunities in the market, looks to be valid. The key to successful growth investing is not to overpay for growth and the managers have built a portfolio of high-quality, fast-growing, less indebted companies for only a modest valuation premium over the market; valuation discipline is an important factor in the process. For investors who are comfortable with high levels of volatility and a sufficiently long investment time horizon, EAT provides a solid option in this specialist area of investment.

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