18 Jun 2019 10:15
London, UK, 18 June 2019
Edison issues review on TR European Growth Trust (TRG)
TR European Growth Trust (TRG) has seen its share price de-rate substantially over the past 18 months, from a c 3% premium to NAV to a c 15% discount, following a period in which its small-cap value style of investing has been out of favour with investors. However, its NAV has risen c 13% year to date, with lead manager Ollie Beckett taking advantage of depressed valuations in smaller European companies whose growth potential he believes is underappreciated by the wider market. The portfolio is diverse, with c 140 holdings broadly spread by country and industry sector. TRG has a more value-oriented investment approach than its peers and is more exposed to stocks at the lower end of the market capitalisation spectrum, which have greater potential to grow exponentially. The largest positions rarely exceed c 2%, which limits stock-specific risk, while a well-covered c 2.5% dividend yield provides support for total returns in periods of market volatility.
TRG's current 14.6% discount to NAV is close to its widest point in the last 12 months (14.7%, on 12 June 2019) and remains higher than both medium- and long-term averages (c 10-13% over three, five and 10 years). It is also broadly in line with the peer group average discount. The NAV has recovered well year to date (up c 13%) and the share price has begun to follow suit, suggesting investors may be beginning to look more favourably at European small-caps.
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