6 Dec 2021 07:00
London, UK, 6 December 2021
Edison issues review on TR European Growth Trust (TRG)
TR European Growth Trust (TRG) is looking to attract a broader investor audience through a range of changes announced after a recent strategic review. The board hopes the change of name (due in January 2022) to The European Smaller Companies Trust will make TRG's investment focus more explicit, while an eight-for-one share split (due on 13 December) should boost liquidity and help attract smaller regular savers on retail platforms. A reduction in the base management fee (already in place) will benefit existing as well as new investors, while a new benchmark (from 1 July 2022) is more of an administrative issue. The successful investment approach, mainly targeting capital growth from attractive but undervalued growth companies, as well as the management team led by Ollie Beckett at Janus Henderson Investors, remain unchanged.
TRG's new name will solve two problems: it explicitly mentions smaller companies, thus making the investment focus clearer, and omits the word 'growth', which has come to be associated with a particular style of investment not shared by TRG, rather than the real-world prospects of its underlying holdings. TRG is the purest-play small-cap fund in its sector, where most peers are skewed more towards mid-caps, and its solid long-term performance record (ranking second in its peer group over one, three, five and 10 years) validates the investment team's quest to find growing companies across four 'lifecycle' segments (early cycle, quality growth, mature, turnaround) where market misperception has led to attractive valuations. We hope to see the discount to NAV (currently 12.6%) narrow as a result of the board's initiatives and the manager's continued focus on mispriced growth.
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