JP Morgan European Discovery Trust plc (LON:JEDT) has announced its half year report & financial statements for the six months ended 30th September 2025.
Highlights:
· NAV total return of +20.7% for the six months ended 30th September 2025, compared with +15.4% for the MSCI Europe (ex UK) Small Cap Index (the ‘Benchmark’). Share price return of +21.0%, outperforming the benchmark by +5.6%.
| Total returns (including dividends reinvested) to 30th September 2025 | ||||
| All periods to 30th September 2025 | Six Months % | Three Years* % | Five Years* % | Ten Years* % |
| Total Return on Net Asset Value per Share | +20.7 | +55.7 | +42.4 | +167.3 |
| Benchmark | +15.4 | +48.5 | +45.7 | +161.3 |
| Excess (NAV vs Benchmark) (%) | +5.3 | +7.2 | -3.3 | +6.0 |
| Return on Share Price | +21 | +74.5 | +59.6 | +197.0 |
| Excess (Share Price vs Benchmark) (%) | +5.6 | +26.0 | +13.9 | +35.7 |
| * Cumulative returns | ||||
· Share price returns outperformed the benchmark over three, five and ten years.
· An interim dividend of 3.0 pence per share has been declared for the six months ended 30th September 2025.
· During the period, the Company repurchased 17,573,909 shares into treasury. A further 577,173 shares have been bought back since the period end.
JP Morgan Euorpean Discovery Trust Chairman, Marc van Gelder, commented:
“I am pleased to present the Company’s results for the half-year ended 30th September 2025, during
which the Company delivered strong outright gains, outpacing the benchmark by +5.3% on a net asset basis; and an enviable long term performance track record having delivered absolute gains and outperformed the market over the last ten years.”
“The Board shares the Portfolio Managers’ increased optimism about the prospects for European small and mid-caps, and for our Company. Recent performance has confirmed the merits of their strategy and the Board is confident that the approach will continue to provide shareholders with attractive returns.”
Portfolio Managers, Jon Ingram, Jack Featherby, Jules Bloch, commented:
“The investment landscape for European smaller companies over the past six months has been shaped by a complex interplay of macroeconomic forces, policy shifts, and geopolitical developments. The period from March to September 2025 has tested the resilience of markets and investors alike, with volatility driven by rapidly evolving trade policies, interest rate adjustments, and political uncertainty. Against this backdrop, our focus remains steadfast: to identify and invest in Europe’s ‘hidden gems’ – companies with positive fundamentals and long-term growth potential that are often overlooked by the broader market. We believe this approach positions us to navigate volatility and deliver strong results for our shareholders.”
CHAIRMAN’S STATEMENT
“The Board shares the Portfolio Managers’ increased optimism about the prospects for European small and mid-caps, and for our Company. Recent performance has confirmed the merits of their strategy and the Board is confident that the approach will continue to provide shareholders with attractive returns.”
Dear Shareholder,
I am pleased to present the Company’s results for the half-year ended 30th September 2025, during which your Company delivered:
• Strong outright gains and outpacing the benchmark by +5.3% on a net asset basis.
• Enviable long term performance track record having delivered absolute gains and outperformed the market over the last ten years.
Investment Performance
Over the six months to end September 2025, the Company achieved a total return on net assets of +20.7%, while the total return on a share price basis was +21.0%. This performance outpaced the benchmark – the MSCI Europe (ex UK) Small Cap Index which returned +15.4% over the period.
The six months were characterised by an unusual degree of volatility in global equity markets, driven in large part by US tariff policy. European markets faced additional challenges arising from the rapidly changing nature of Europe’s relationship with the US, which occurred against a backdrop of ongoing Russian aggression on its eastern borders. These developments prompted significant increases in defence and infrastructure spending across the region, with Germany setting the pace.
European smaller companies proved relatively resilient, realising significant outright gains and outperforming European larger caps thanks to their comparative immunity from US tariffs, their greater reliance on domestic revenues and gains in areas set to benefit from increased government spending and the adoption of artificial intelligence (AI). Your Company’s exposure to these positive influences ensured strong performance. This is very pleasing and a testament to the ongoing effectiveness of the portfolio enhancements implemented by the Portfolio Managers over the first half of FY24 – which were intended to minimise downside risk during periods of volatility and capture upside risk when volatility declines.
The Company adopts a long-term investment strategy, so it is important to also consider performance over a longer timeframe. On this basis, the Company’s outperformance over the first six months of this financial year has improved its already robust long-term performance track record. Over the ten years ending September 2025, the Company delivered absolute gains and outperformed the market – annualised returns averaged +10.3% on an NAV basis, versus an equivalent benchmark return of +10.1%.
The Investment Manager’s Report that follows provides a review and outlook of markets, as well as more detail on the performance drivers within the portfolio.
Revenue and Dividends
The Company’s net revenue return for the six months to 30th September 2025 was higher than the corresponding period in 2024, at 15.60 pence per share (30th September 2024: 10.72 pence). The Board has decided the interim dividend of 3.0 pence (2024: 3.0 pence) per share, which will be paid on 5th February 2026 to shareholders on the register as at 19th December 2025 (the ex-dividend date will be 18th December 2025). When determining the final dividend for the current financial year, the Board will take account of the income received over the entire year, and also the level of the Company’s revenue reserves, which stood at £27.57 million as at 30th September 2025.
Discount Management and Share Repurchases
At the AGM held in July 2025, shareholders gave approval for the Company to renew the Directors’ authority to repurchase up to 14.99% of the Company’s shares for cancellation or transfer into Treasury.
The Board monitors the level of the discount carefully. When appropriate, it uses the ability to repurchase shares to minimise the short-term volatility and the absolute level of the discount. The Company repurchased 17,573,909 shares into Treasury during the six-month reporting period. Since the half year end, a further 577,173 shares have been bought back for holding in Treasury.
The discount at which the Company’s shares trade relative to net asset value (NAV) has been in single digits for over a year and narrowed slightly to 7.1% over the six months to end September 2025 from 7.3% at the end of the financial year. This compares with a discount a year ago of 8.3% at end September 2024. At the time of writing, the share price discount was 7.8%.
Management Fee
As previously communicated, an agreement was reached with the Manager to lower the investment management fee with effect from 1st April 2025. The fee is now applied on a tiered basis to the Company’s net assets: 0.70% per annum on the first £300 million, and 0.65% on net assets exceeding that amount. This replaces the previous flat fee of 0.75% of net assets.
The Board
Having served on the Board since August 2016 and as Chairman since July 2019, I will be retiring at the conclusion of the 2026 Annual General Meeting scheduled for July 2026. The Board with guidance from the Nomination Committee is currently considering my successor.
The Board continues to look ahead to manage its succession planning and has also begun the process for recruiting another Non-Executive Director.
Environmental, Social and Governance (‘ESG’)
The Board maintains an ongoing dialogue with the Manager regarding the integration of financially material ESG factors into the investment process. These ESG considerations are incorporated at every stage of investment decision-making. The Board aligns with the Investment Manager’s perspective on the importance of financially material ESG factors, both at the point of initial investment and throughout the duration of the holding through engagement with investee companies.
For more details, please refer to pages 35 to 37 of the 2025 Annual Report which can be found on the Company’s website at: www.jpmeuropeandiscovery.co.uk.
Stay Informed
The Company delivers email updates with regular news and views, as well as the latest performance. If you have not already signed up to receive these communications and you wish to do so, you can opt in via tinyurl.com/JEDT-Sign-Up or by scanning the QR code on page 9 of the Half Year Report.
Outlook
The Board shares the Portfolio Managers’ increased optimism about the prospects for European small and mid-caps, and for our Company. Indeed, the outlook continues to improve, despite ongoing tariff uncertainties and geopolitical tensions.
The regional economy is being supported by lower interest rates. Major increases in defence and infrastructure spending will continue to underpin activity in many sectors over the coming year and beyond. Smaller cap companies are likely to be major beneficiaries of these trends. Their innate innovative, flexible nature also suggests they will be quick to participate in the AI revolution and realise related productivity gains and efficiencies.
In addition, despite the recent re-rating of European smaller caps, valuations in this part of the market remain very attractive in relative as well as absolute terms versus European large caps, the US and other global markets. So there is significant scope for further market gains. International investors are already showing increased interest in European equities, including via M&A activity. This trend is set to continue, with European smaller companies likely to be the target of many of these deals.
My fellow Directors and I believe the portfolio is well-positioned to capitalise on these positive developments, with the Portfolio Managers’ ongoing focus on sound businesses with strong long-term growth potential. Recent performance has confirmed the merits of their strategy and the Board is confident that the approach will continue to provide shareholders with attractive returns as European smaller companies continue their long overdue rebound.
Marc van Gelder
Chairman 28th November 2025
INVESTMENT MANAGER’S REPORT
“The investment landscape for European smaller companies over the past six months has been shaped by a complex interplay of macroeconomic forces, policy shifts, and geopolitical developments. The period from March to September 2025 has tested the resilience of markets and investors alike, with volatility driven by rapidly evolving trade policies, interest rate adjustments, and political uncertainty.
“Against this backdrop, our focus remains steadfast: to identify and invest in Europe’s ‘hidden gems’ – companies with positive fundamentals and long-term growth potential that are often overlooked by the broader market. We believe this approach positions us to navigate volatility and deliver strong results for our shareholders. In our report we review the macroeconomic environment, discuss its impact on our portfolio, and share our outlook for the months ahead.”
Macroeconomic Review
The six months ended 30th September 2025 were marked by significant macroeconomic shifts, with global and regional events exerting a pronounced influence on European markets – particularly for smaller companies. The most notable development has been the escalation of trade tensions sparked by US President Trump’s aggressive tariff policy. The early April introduction and subsequent adjustment of tariffs on a wide range of goods, including those from the EU, China, and other major trading partners, has injected considerable uncertainty into global trade flows. While the US reached temporary agreements with the EU and Japan, the threat of further tariff rises remains, and the legal status of some measures is still under review. These policies have led to increased market volatility, with European exporters and industrials particularly exposed to the shifting landscape.
Interest rate policy has also played a central role. The European Central Bank (ECB) continued its rate-cutting cycle, lowering the deposit rate by 25 basis points to 2% in June. Softer inflation data across the Eurozone – headline CPI fell to its 2.0% target and core inflation declined to 2.3% – has supported this more accommodative stance. Although the ECB has signalled that this easing cycle may be nearing its end. In contrast, the US Federal Reserve delivered its first rate cut of 2025 in September, responding to a weakening labour market and softer consumer confidence.
Political risk has remained elevated, particularly in continental Europe. France has been at the epi-centre of fiscal and political instability, with the resignation of two prime ministers in quick succession and a sharp rise in government bond yields. The broader Eurozone has faced similar challenges, with investor sentiment fluctuating in response to ongoing debates over fiscal discipline and the future direction of monetary policy. Meanwhile, geopolitical tensions in the Middle East and Asia, as well as the US government shutdown, have added to the global risk environment, with knock-on effects for European markets.
Despite these headwinds, European small caps have demonstrated resilience, benefiting from their high domestic revenue base and comparatively low exposure to global trade disruptions. Pockets of strength have emerged in areas linked to infrastructure investment, defence spending, and technological innovation. While sectors such as industrials, materials, and financials have experienced volatility.
In terms of market performance, the MSCI Europe ex UK Small Cap index outperformed most major European benchmarks over the six-month review period. While large cap indices were weighed down by global trade uncertainty and sector-specific challenges. European small caps did well thanks to their greater exposure to domestic growth drivers and more limited sensitivity to international trade tensions. This relative strength underscores the attractiveness of the asset class in the current environment and supports our continued focus on identifying high-quality opportunities within the European small cap universe.
Portfolio Performance
Table 1: Summary performance of JPMorgan European Discovery Trust
| 31st March – 30th September 2025 | % |
| Net Asset Value (NAV) | 20.7 |
| Benchmark relative | 5.3 |
| Share Price | 21.0 |
| End of period discount | -7.1 |
| MSCI Europe ex UK Small Cap | 15.4 |
| MSCI Europe ex UK | 10.7 |
Source: J.P. Morgan Asset Management and Bloomberg.
Over the six-month period ended 30th September 2025, the Company returned +20.7% on a total return NAV basis and +21.0% in share price terms – outperforming its benchmark, the MSCI Europe (ex UK) Small Cap Index, which rose by +15.4% over the same period. These results further enhanced the Company’s long-term performance track record. It has now delivered positive absolute returns in both NAV and share price terms over the one, three, five and ten-year periods ending 30th September 2025. It has also outpaced the benchmark over all these periods except over five years, when it undershot the average annualised benchmark return of 7.8% by 50 basis points. The Company made annualised total returns of +10.3% on an NAV basis and +11.5% in share price terms over the ten-year period, ahead of the corresponding benchmark return of +10.1%.
Table 2: Top and bottom three contributing sectors to performance
| PORTFOLIO | BENCHMARK | ATTRIBUTION | ||||
| SECTORS | Average | Average | ||||
| All numbers are percentages | Weight | Return | Weight | Selection | Allocation | Total |
| Industrials | 30.0 | 31.7 | 26.6 | 2.4 | 0.1 | 2.5 |
| Financials | 15.8 | 32.1 | 14.3 | 1.4 | 0.0 | 1.4 |
| Real Estate | 6.0 | 29.6 | 8.3 | 0.8 | 0.1 | 0.9 |
| Information Technology | 9.5 | 6.6 | 7.9 | -0.1 | -0.4 | -0.5 |
| Health Care | 6.7 | -2.1 | 9.1 | -0.8 | 0.1 | -0.7 |
| Communication Services | 5.9 | -6.7 | 5.0 | -0.9 | -0.1 | -1.0 |
Source: J.P. Morgan Asset Management.
By sector, our overweight positions in Industrials and Financials were the largest positive contributors to returns. Our industrial holdings benefited from renewed domestic investment and stimulus measures across Europe, with companies such as Spie and Bilfinger (French and German engineering companies) seeing direct gains from the significant increase in German infrastructure spending announced earlier this year. In Financials, our bank holdings experienced a rebound in loan growth after a period of stagnation. While asset managers and insurers did well thanks to higher market levels and improved investor sentiment.
Conversely, Information Technology, Health Care, and Communication Services were the largest detractors. These sectors faced headwinds from global trends, including the disruptive impact of artificial intelligence (AI) on legacy business models and the weakening US dollar. For example, our position in Reply, an Italian IT services company, was affected by market concerns over long-term demand for IT consulting. While Ipsos, the French market research firm, saw sentiment decline due to uncertainty around the future of physical data collection in the age of generative AI.
Table 3: Top and Bottom three investments contributing to performance
| PORTFOLIO | BENCHMARK | ||||
| SECURITY NAME | Average | Average | Weight | Total | |
| All numbers are percentages | Weight | Return | Weight | Difference | Effect |
| Accelleron Industries | 2.0 | 78.7 | 0.7 | 1.3 | 0.6 |
| Tecnicas Reunidas | 1.4 | 69.4 | 0.1 | 1.3 | 0.6 |
| Alzchem | 1.5 | 70.5 | 0.1 | 1.4 | 0.6 |
| Fuchs Petrolub | 1.8 | -8.5 | 0.3 | 1.5 | -0.3 |
| Belimo | 0.0 | 0.0 | 0.8 | -0.8 | -0.3 |
| Reply | 1.5 | -15.5 | 0.4 | 1.1 | -0.4 |
Source: J.P. Morgan Asset Management
At the stock level, the top three contributors to performance over the period were:
• Accelleron Industries is the Swiss-based market leader in high-power turbochargers used in a variety of fields including marine services and electrical power generation (balancing and back-up). This investment contributed significantly to performance as the International Maritime Organisation (IMO) has set new standards for stricter climate regulations. The final vote on these standards is scheduled to take place in 2026 and is expected to act as a tailwind for Accelleron, as it will lift demand for the company’s refurbishment business. Additionally, Accelleron released solid results which highlighted continued robust demand for marine services and rapid growth in the supply of data centre infrastructure.
• Tecnicas Reunidas is a Spanish engineering and construction company serving the oil and gas sector. The stock was another key contributor to returns due to its positive demand outlook and increased services contracts which, along with strong pipeline development, will support future earnings. We note that these factors led the company to raise guidance in October (after the H1 period end).
• Alzchem is a German speciality chemical company, with offerings in Nitroguanidine and Creatine. Nitroguanidine is a powerful, yet stable, explosive, which makes it ideal for use in weaponry. Alzchem’s share price rose due to its exposure to higher defence spending across Europe. Creatine is a health supplement experiencing rising popularity among sportspeople and fitness enthusiasts.
The top three detractors were:
• Fuchs, a leading German independent lubricants producer. It underperformed after management cut guidance alongside poor second-quarter numbers. This reflects a weaker demand environment caused by tariff uncertainty, ongoing political tensions and subdued industrial production in Europe. We have maintained a position in Fuchs as the valuation remains attractive and cash generation is expected to remain solid with limited capex requirements.
• Belimo, is a Swiss heating, ventilation and air conditioning equipment provider which represents a large benchmark weight. Over the period we did not hold a position in the company. Our decision to remain underweight in Belimo relative to the benchmark negatively impacted performance, as the company’s share price rose sharply due to increased demand for its data center solutions. We chose not to invest in Belimo because we believed its valuation overstated the market potential of its data center offering.
• Reply is a Italian IT services company. The company underperformed due to continued poor momentum and weakness in demand from the automotive sector and around worries about AI’s ultimate impact on IT spending. However, the stock remains in our portfolio as we continue to have confidence in the long-term outlook for the business and on the long-term outlook for IT spending.
Portfolio Changes and Current Positioning
Table 4: Top three investment portfolio buys and sells
| PORTFOLIO | |||
| SECURITY NAME | SECTOR | CHANGE % | TRADE TYPE |
| Tecnicas Reunidas | Energy | 2.0 | Topped up |
| Vienna Insurance Group AG | Financials | 1.7 | New buy |
| CIE Automotive SA | Consumer Discretionary | 1.4 | New buy |
| CTS Eventim AG & CO | Communication Services | -2.2 | Sold out |
| AAK AB | Consumer Staples | -2.2 | Sold out |
| Freenet AG | Communication Services | -2.1 | Sold out |
Source: J.P. Morgan Asset Management.
During the period, we added to the Company’s investment holding in Tecnicas Reunidas and initiated new positions in Vienna Insurance Group (VIG) and CIE Automotive (CIE).
As mentioned earlier, our decision to add to Tecnicas Reunidas was motivated by the company’s recent good performance. Additionally, positive first-quarter results had lifted analyst expectations and highlighted the business’s favourable outlook.
The investment in VIG, an Austrian-based international insurance group, was driven by the stock’s attractive valuation and a positive first-half release. This showed continued robust growth and improved profitability across multiple regions and led the company to raise full-year guidance.
The Company’s third largest portfolio position change was the acquisition of CIE, a Spanish auto parts supplier. CIE has a diverse portfolio, primarily serving Europe and North America, but growing rapidly in markets such as Brazil and India. We initiated the position due to an attractive valuation, the announcement of share buybacks and the potential for bolt-on acquisitions to drive earnings growth going forward.
Over the review period we exited positions in CTS Eventim, AAK, and Freenet due to uncertainties about their future earnings prospects.
CTS Eventim is Europe’s largest ticketing company based in Germany. The stock has been performing well but the company presented disappointing second-quarter results that highlighted weakness in live entertainment and concerns about a slowdown in the growth of its online ticketing platform. AAK, a Swedish specialty vegetable oils and fats producer, is suffering from continued soft demand and increasing competitive pressure. While Freenet, a leading German mobile service provider, released poor first-quarter results that highlighted weak trends in both TV and Mobile segments.
As a result of the above portfolio changes, the Company’s investment portfolio sector positioning has evolved as shown below.
Chart 1: Sector positioning and weight changes
See page 15 of the Half Year Report for Chart 1.
The most significant change during the first half of the financial year was the Company’s reduction in exposure to the Communication Services sector. This was primarily due to our decision to exit the position in CTS Eventim and reduce the holding in Ipsos due to uncertainties around the impact of generative AI on traditional market research (both explained earlier). These concerns, combined with leadership changes, led us to reallocate capital to more promising opportunities.
We lifted our exposure to the Industrials, Consumer Discretionary, Financials and Energy sectors reflecting our confidence in several key trends. Domestic stimulus measures and infrastructure investment have supported industrial and energy services companies and are likely to continue to do so over the next few years. Improving consumer confidence is boosting discretionary spending. While a stable interest rate environment and benign inflation have provided a tailwind for financials, particularly in loan growth and asset management. These sector adjustments align with our strategy to capture opportunities arising from Europe’s economic recovery and structural transformation.
Outlook
Looking ahead, we continue to remain optimistic about the prospects for European smaller companies. The asset class stands out for its attractive valuations, strong balance sheets, and exposure to long-term structural growth drivers. The easing of monetary policy headwinds, combined with improving economic indicators and the potential for increased M&A activity, creates a supportive environment for small and mid-caps. We expect lower interest rates and stabilising inflation to continue to support domestically oriented businesses While ongoing fiscal stimulus and infrastructure investment should provide additional impetus to activity in many areas.
Political uncertainty and trade policy volatility are likely to persist, but we believe that company fundamentals will ultimately drive performance over the longer term. European small and mid-caps have historically outperformed larger peers during periods of economic recovery, and their agility allows them to adapt quickly to changing market conditions. The asset class is also well-positioned to capitalise on emerging themes such as the AI revolution, pharmaceutical innovation, as well as the transition to renewable energy.
Our strategy remains focused on uncovering overlooked opportunities – companies with robust business models, skilled and effective management teams with the potential to deliver sustainable growth. As private equity and strategic investors increasingly target these ‘hidden gems,’ we anticipate further support for valuations and deal activity. After a period of underperformance, European small caps are overdue for a resurgence, and we are confident that our portfolio is well-positioned to capture this recovery for the ongoing benefit of our shareholders.
For and on behalf of
J.P. Morgan Asset Management
Investment Manager
Jules Bloch
Jack Featherby
Jon Ingram
Portfolio Managers 28th November 2025
