Stock selection drives outperformance of European Assets Trust
The European Assets Trust, the closed-end investment company run by F&C Investments, has produced strong annual results, driven, says the manager by its stock selection process.
Net asset value total return per share rose 28.2% in sterling terms over the period (32.0% in euros).
The Trust materially outperformed its benchmark, the HSBC Smaller Europe ex UK index, which returned 17.0% (20.4% in euros). The Company has also outperformed the benchmark over three and five years.
Over 10 years it has significantly outperformed many of the major equity indices, including the UK (FTSE 100 Index) and US (S&P 500 Index). The share price discount to net asset value was 6.4% as at 31 December 2012, compared with 11.1% at the previous year-end.
The company, listed in London and Amsterdam, announced an increase in dividend for 2013 of 24.8%, at €0.5502 per share. This represents an annual dividend equivalent to 6% of the net asset value at the end of the preceding year.
The 2013 dividend will be paid in three equal instalments of €0.1834 per share on 31 January, 31 May and 30 August. The January dividend of €0.1834 per share amounted to 15.345p per share in sterling terms.
Stock selection drove the majority of performance over the year, with returns coming from a range of sectors. This was achieved with low portfolio turnover at 22% for the year, reflecting our long term investment philosophy.
The largest position, Glanbia, an Irish based global nutritionals business, had a strong year, rising 77.8%. C&C Group, the producers of Magners Cider and Tennent’s lager, rose 57.9% during the year, and made a transformational acquisition in the US premium cider market during the period.
German robotics company Kuka rose 90.0%, as it benefitted from strong results and order momentum. Financial holdings also delivered good performance, with Azimut, the Italian asset manager, rising 76.2% during the period.
Commenting on the year ahead, London-based fund manager Sam Cosh said 2013 has seen a very strong start.
“Recoveries are rarely smooth however, and Europe clearly still has some challenges ahead, reflected in the recent Italian elections. Despite the rally, European equity remains a neglected asset class, trading at attractive valuations on both a relative and absolute basis, which provides excellent investment opportunities for disciplined stock pickers.
“Additionally, improving credit conditions should, at some point, filter through to economies improving corporate profits, which in turn will encourage a flow into the asset class. This has the potential to be a very powerful driver of European equity market returns. With greater confidence in the market outlook, we could also see the prospect of greater merger and acquisition activity, providing a spur to the small and mid-cap market in which we invest.”
The manager made use of the gearing facility during 2012 where investment opportunities arose. At the year-end the Company was 6% geared.