28th Nov 2019 14:53
(Alliance News) - European Investment Trust PLC on Thursday said it was far behind its benchmark in its most recent financial year, with banking and energy stocks especially weak.
In its year ended September 30, the firm's net asset value total return was negative 4.6%, well behind the positive 6.9% return from the FTSE All-World Europe ex UK Index, adjusted to sterling.
All European Investment Trust's bank holdings produced negative returns in the period, the one exception being Italian firm Mediobanca Group. German lender Commerzbank AG was the worse performer. A number of bank holdings were sold in the year but at the end of September European Investment Trust still had a 9.7% holding in banking stocks which it sees as undervalued.
Another area of weakness was energy stocks, though they had performed well the year before. Among the weaker performers was Petroleum Geo-Services, where a delayed bank refinancing caused its share price to fall sharply.
As at September 30, the end of the company's financial year, NAV per share stood at 929.0 pence, 7.5% less than the 1,004.3p figure the year before
The trust intends to change its name to Baillie Gifford European Growth Trust PLC once it appoints Baillie Gifford & Co Ltd as its new alternative investment fund manager, replacing Edinburgh Partners. Notice was served October 9 and the termination is effective January 9, 2020.
Chair Michael MacPhee said: "In view both of disappointing long and medium term results and the board's diminishing confidence in our investment manager's process, on 23 May 2019 the company announced that it would undertake a review of the company's investment management arrangements."
He added: "After careful consideration and subsequent inquisition of a short list, the board decided to appoint Baillie Gifford & Co Ltd as the company's new alternative investment fund manager, company secretary and administrator. Our overriding concern in making this decision is to optimise the chances of generating strong absolute and relative future investment returns and for the company to offer a distinctive and attractive proposition to both existing and prospective shareholders."
In addition, European Investment Trust is planning tender offer for up to 10% of its shares at a 2% discount to prevailing NAV. This will require shareholder approval.
The trust intends to pay a final dividend of 21.5 pence per share, taking the full year total up 15% to 31.0p per share from 27.0p per share.
Shares in European Investment Trust were down 0.1% at 857.05p in London on Thursday.
By Anna Farley; [email protected]
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