JPMorgan European Discovery Trust plc (LON:JEDT) has announced its January commentary.
JEDT’s share price and NAV rose 19.03% and 15.05% respectively on a cumulative basis to 31 January 2024
Month in review – As of 31/01/2024
- The trust outperformed its benchmark over January.
- Positive contributors to relative returns included stock selection in industrial engineering and stock selection and an overweight position in industrial support services.
- Detractors included stock selection and an underweight position in industrial transportation and stock selection in technology hardware and equipment.
- At the stock level, an overweight position in Kindred, a Swedish gambling company, outperformed after receiving a takeover offer from Francaise des Jeux.
- An overweight position in SPIE, a French multi-technical services company, outperformed as the company continued to benefit from strong investments into electrification & energy efficiency.
- Conversely, an overweight position in Forvia, a French auto parts supplier, underperformed as concerns emerged around their ability to pass on price increases while demand for autos seems to be slowing.
- An overweight position in Melexis, a Belgian automotive chip designer, also underperformed as the inventories of chips have started to increase at auto original equipment manufacturers (OEMs), signaling a potential slowdown in demand.
Looking ahead – As of 31/01/2024
- On top of the macroeconomic uncertainties, there are numerous political uncertainties arising out of the ongoing geopolitical tensions and the imminent national elections.
- European equities trade on an extreme discount to US equities, a discount that has grown following strong 2023 technology-led gains in the US. This argument may not be new to prospective investors; however, the European equity market today can offer comparable levels of quality and growth potential.
- While the short-term outlook remains uncertain, we believe European equities offer an attractive entry point to the long-term investor, and we remain focused on selecting companies with pricing power, strong balance sheets and the ability to grow significantly over the long term.
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.
