JPMorgan European Discovery Trust (LON:JEDT) have published its October factsheet.
Month in review as of 31/10/2024
- The trust outperformed the benchmark over October.
- Positive contributors to relative returns included stock selection in oil, gas & coal and banks.
- Detractors included stock selection in leisure goods and automobiles & parts.
- At the stock level, an overweight position in Aker Solutions, a Norwegian energy equipment and services company, contributed to performance over the month. The firm’s share price rose after it announced an extraordinary dividend amounting to almost 50% of the share price.
- Our overweight position in Cairn Homes, an Irish residential construction company, also contributed to performance over the period due to continued strong momentum and support for residential construction from the Irish government.
- Our overweight position in Munters, an air treatment solutions provider, detracted from performance due to weaker-than-expected third-quarter results.
- Our overweight to AAK, a speciality oils and fats company, also detracted from performance following strong performance and solid third-quarter results. We believe this is due to profit-taking, paired with investors’ cautious stance around tougher comps and increased uncertainty surrounding the impact of cocoa pricing pressures on the demand for confectionery.
Looking ahead as of 31/10/2024
- 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.
- European equities trade on an extreme discount 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.
- Improving economic conditions, attractive fundamentals and structurally improving interest rates are likely to help extend this rally, presenting investors with many attractive opportunities across markets.
The JPMorgan European Discovery Trust plc is a UK-based investment trust focused on achieving capital growth through a diversified portfolio of smaller companies across continental Europe, excluding the United Kingdom. Established in 1990 and listed on the London Stock Exchange under the ticker symbol JEDT, it is part of the FTSE 250 Index. Managed by J.P. Morgan Asset Management, the trust aims to outperform the MSCI Europe (ex-UK) Small Cap Net Total Return Index, its benchmark. It was formerly known as JPMorgan European Smaller Companies Trust plc before adopting its current name in June 2021.
