JPMorgan European Discovery Trust plc (LON:JEDT) published its August fact sheet. The Investment Trust company aims to provide capital growth from a diversified portfolio of smaller European companies (excluding the United Kingdom).
As of 31/8/2022
- The trust underperformed its benchmark in August.
- Positive contributors to relative returns included stock selection in pharmaceuticals & biotechnology and electronic & electrical equipment.
- Detractors included not holding banks and stock selection in construction & materials.
- At a stock level, an overweight position in Virbac, a French animal health company, outperformed as demand for veterinary products continued to be strong and the company continued to optimise its costs.
- An overweight position in ASR Nederland, a Dutch insurance company, outperformed after its strong results enabled it to announce larger-than-expected share buybacks.
- On the other hand, an overweight position in GN Store Nord, a Danish manufacturer of hearing aids and audio products, contributed negatively after it announced a weakening of demand for consumer electronics.
- An overweight position in Bechtle, a German IT product reseller, contributed negatively as supply constraints continued to hurt the top-line growth of the company.
Looking ahead
As of 31/08/2022
- Concerns around inflation remain at the centre of market volatility. A meaningful decline in government spending relative to revenues will reduce aggregate demand within the economy. Recession fears and the current deceleration in earnings growth could also reduce capital spending momentum. Therefore, there is a risk that the economy may see one or more additional quarters of negative real GDP growth in late 2022 or in 2023.
- However, as we move into 2023, we believe that the squeeze on consumer spending, the clearing of supply-chain constraints and diminishing wage growth should cause inflation to soften, helping central banks to slowly return to a more accommodative policy regime.
- While the short-term outlook is both challenging and confusing, given the better valuations yielded by a painful first-half sell-off in financial assets, we believe equity markets could now offer an attractive entry point to the long-term investor.
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.
