JPMorgan European Discovery Trust plc (LON:JEDT) has announced its March commentary.
Month in review As of 31/03/2025
- The Trust outperformed the benchmark over March.
- Positive contributors to relative returns included stock selection in industrial support services and construction and materials.
- Detractors included stock selection in media and stock selection and an overweight position in pharmaceuticals and biotechnology.
- At the stock level, our overweight in Bilfinger, the German industrial service provider, contributed to performance over the month following German election results that led to a rally of German stocks being given hopes of increased stimulus packages. Additionally, Bilfinger reported strong Fiscal Year (FY) 2024 and fourth-quarter results at the beginning of March, alongside FY 2025 guidance that points towards continued margin improvements.
- An overweight position in SPIE, the technical services provider, also contributed to relative returns after the company reported positive full year results, with earnings ahead of expectations driven by organic growth and continued margin progress. The company also issued ambitious guidance for 2025-2028, including a target of 3-4% organic growth per annum.
- Our overweight position in DO & CO, the Austrian airline and event catering business, detracted from performance given worries around weakness in US air travel. Several US airlines have issued profit warnings, brought on by unfavourable weather and a softer macroeconomic environment that is dampening demand.
- Our overweight position in Bonesupport, the healthcare company specialising in orthobiologics, also detracted relatively, given a combination of profit-taking after a strong performance, foreign exchange (FX) effects, and tariff risks.
Looking ahead As of 31/03/2025
- Europe has been galvanised into action with meaningful fiscal support, which could boost growth prospects for years to come. Underneath the geopolitical noise, it is clear the fabric of the global economy is changing, with significant consequences for the distribution of growth and potentially, inflation.
- European equities trade on an extreme discount to US equities. This argument may not be new to prospective investors; however, the European equity market today can offer comparable levels of quality and growth potential. This valuation support is recognised by European CEOs, who are buying back more stock than ever before.
- Technology adoption, healthcare innovation, emerging market consumption and climate change remain the key mega forces behind our secular themes. In 2025, we believe the biggest influencer on opportunity in this part of our portfolio will be AI.
- Looking ahead, improving economic conditions, attractive fundamentals and structurally improving interest rates are likely to present investors with many attractive opportunities across markets.
JPMorgan European Discovery Trust 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.
