JPMorgan European Discovery Trust (LON:JEDT) month in review as of 30/09/2024.
- The trust outperformed the benchmark over September.
- Positive contributors to relative returns included stock selection in media and an underweight position in technology hardware & equipment.
- Detractors included stock selection in travel & leisure and construction & materials.
- At the stock level, an overweight position in CTS Eventim, Europe’s largest ticketing company, was positive for relative returns. The share price moved higher following news that the company would merge two of its subsidiaries to create additional synergies, optimise management structures and drive growth more effectively. Comments from key peer Live Nation also supported the shares, with management providing an upbeat message on the ongoing growth of live music and entertainment.
- An overweight position in TAG Immobilien, a German residential real estate company, also contributed to performance over the month as interest-rate cuts by the European Central Bank (ECB) are forming a tailwind to the sector and improving investor sentiment.
- An overweight position in DO & CO, a hospitality services provider, detracted from performance over the month due to what we believe was profit-taking following its strong performance, which had approached multi-year highs.
- An overweight position in Fugro, a Dutch geological data specialist, also detracted from performance over the month due to what we believe was profit-taking following its strong performance, which had approached multi-year highs.
Looking ahead
- Geopolitics, commodity prices and supply chains remain key considerations. Escalating conflict in the Middle East and ongoing disruptions to shipping in the Red Sea could have significant impacts on many companies. However, many commodity prices have been easing in response to falling demand from China in particular, which could help contain inflationary pressures.
- Europe’s manufacturing sector is recovering, and potential rate cuts by the ECB could provide relief. Fiscal policies may boost demand, especially in green energy and defence spending, offering more upside potential compared to the US.
- European equities trade on an extreme discount compared to US equities. That discount has grown following strong 2023 technology-led gains in the US. This argument may not be new to prospective investors, but the European equity market currently can offer comparable levels of quality and growth potential.
