JPMorgan European Discovery Trust plc (LON:JEDT) targets capital growth through investing in smaller continental European equities. The trust is managed under the principles of value, quality, and momentum, with the team managing JEDT having access to large teams of traditional analysts and data scientists.
Over the last five years , JEDT’s NAV total return of c. 82% is ahead of the benchmark’s c. 75% total return and slightly behind the peer group’s NAV total return of c. 90%. Shorter term, JEDT’s NAV TR is ahead of the benchmark and peer group over one year, and over ten years, JEDT’s NAV TR of c. 133% is a good reminder of the potential for high returns from small-caps, being ahead of the benchmark, c. 125%, and the large-cap equivalent index, c. 109%.
Since March 2024 JEDT has been managed by Jules Bloch, Jack Featherby and Jon Ingram. The new team continues with the same high-level investment approach as before, with some refinements to risk control and greater analysis of decision-making. Smaller companies made positive returns over the last few years, but the team’s view is that European smaller companies continue to trade at historically attractive valuations that could be the source of significant returns.
JEDT’s Discount, c. 8% at the time of writing, has narrowed significantly compared to the five-year average of c. 13%. Since 2023, JEDT’s board has spent c. £167m on buybacks, including a tender offer in September 2024 returning £104m to shareholders at a 2% (plus costs) discount. In the Discount section, we look at some of the contributory factors in JEDT’s peer group that have played a role in narrowing the discount.
JPMorgan European Discovery Trust primarily targets capital growth and its yield, 2.1%, can be viewed as an outcome rather than an objective of the strategy, and investors should not necessarily expect a progressive dividend.
