JPMorgan European Discovery Trust plc (LON:JEDT) is a high-conviction portfolio of c. 70 European smaller companies, targeting capital growth across a broad range of sectors by focusing on under-researched businesses with the potential to grow faster than many large companies.
Analyst’s View
European equities have quietly been gathering momentum for some time, but it was really 2024 into 2025 that saw this rise to prominence, with strong positive inflows into European equity funds indicating a shift in sentiment among global investors. Although relatively low European equity valuations have certainly played a role in this renewed enthusiasm, there has also been a change in sentiment to Europe’s potential from a domestic perspective, with PMIs for industrial and services businesses turning a little more positive, together with signs of better consumer confidence. And Germany’s significant spending plans for infrastructure and defence have also boosted sentiment. ‘Europe’ is of course a complex patchwork, but at a high level these factors have come together to create a more constructive environment. Small-caps generally, and JEDT’s portfolio specifically, tend to have a more domestic bias than some of Europe’s mega-caps, and thus these factors lead to a more constructive environment for small-caps.
As is often the case during the first wave of a recovery, money tends to chase liquidity, for which read ‘large-caps’, which have seen the majority of flows. But recently the JEDT team report that there is increased interest in their small-cap mandates, squaring with the domestic bias and the very low valuations that small-caps continue to trade on. Consequently, we think that, even with the very strong performance recorded by JEDT recently, the environment remains constructive for European small-caps and JEDT looks extremely well-placed to capture the potential.
JPMorgan European Discovery Trust plc 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.
