JPMorgan European Discovery Trust plc (LON:JEDT) has provided its March commentary.
Month in Review
As of 31/03/2022
- The trust underperformed its benchmark in March.
- Positive contributors to relative returns included stock selection and an overweight position in non-life insurance, and stock selection in general industrials.
- Detractors included stock selection and an overweight position in leisure goods, and stock selection in chemicals.
- At a stock level, an overweight position in Fortnox, a Swedish software company, outperformed. The company continues to deliver strong client growth and announced a significant price increase that should be well accepted by clients.
- An overweight position in ASR Nederland, a Dutch insurance company, outperformed as investors anticipated that higher interest rates could positively contribute to ASR’s earnings.
- On the other hand, an overweight position in SoftwareOne, a Swiss software reseller, underperformed after cutting its margin guidance to account for higher recruitments than expected.
- Not holding Rheinmetall, the German defence company, contributed negatively after the German government announced a significant expansion of its military spending.
Looking ahead
As of 31/03/2022
- The start of the war between Russia and Ukraine and the resulting commodity supply shock has posed a dilemma for central banks that have been forced to choose between trying to tame inflation or support growth. However, recent monetary policy responses from central banks suggest that they view inflation as the more pressing problem to tackle, unless the growth outlook materially deteriorates.
- We believe that there is still considerable pent-up demand. Strong household balance sheets and savings rates mean developed world consumers are in better shape to support economic expansion over the medium term.
- Historically, geopolitical events, even those involving major energy producers, have not had a lasting impact on markets. While ongoing geopolitical tensions and the prospect of higher interest rates may spark occasional bouts of volatility, we believe the outlook for equities remains positive.
JPMorgan European Discovery Trust plc (LON:JEDT) is an investment trust company. The Investment Trust JEDT objective is to achieve capital growth from a portfolio of quoted smaller companies in Europe, excluding the United Kingdom.
