15th Aug 2025 10:19
(Alliance News) - European Opportunities Trust PLC on Friday reported a decline in its net asset value as Novo Nordisk AS dragged on performance, but with the trust noting an "encouraging backdrop" for its investment strategy.
European Opportunities Trust invests in European companies offering capital growth and is managed by Devon Equity Management Ltd.
The trust realised a NAV total return of minus 3.7% for the financial year that ended May 31, coupled with share price returns of minus 0.9%, whilst its benchmark, the MSCI Europe index returned 8.0% over the same period.
NAV per share at the end of May was 968.89 pence, down 3.9% from 1,008.48p a year earlier. However, the trust noted that its NAV has risen 5.9% to 1,026p at July 31 since year-end, compared to a 1.5% benchmark total return.
During financial 2025, European Opportunities cited Copenhagen-based pharmaceuticals firm Novo Nordisk as the "standout detractor" on performance, noting that "competitive developments" in the weight loss drug market put pressure on its share price.
The stock fell 51% in the period, and represented 10.4% of the portfolio weight as of May 31. It contributed minus 6.7% to the portfolio return.
Both Novo Nordisk and Indiana, US-based peer, Eli Lilly & Co, are currently competing in the sector, notably on the development of an oral-based weight loss treatment, with trial results heavily impacting investor sentiment.
"Whilst Novo Nordisk was the trail blazer with their GLP-1 drugs, such is the scale of the market opportunity that many new entrants have been attracted to this space: the stock market's concern is that their 'first mover advantage' is not an enduring advantage," said the trust.
"Recent clinical trial results from their 'next generation' drug underwhelmed investors," it added.
European Opportunities realised a reduction in its discount to net asset value during the period, slimming to 7.5% from 10.2%.
Shares in the trust edged 0.3% higher to 933.00p on Friday morning in London.
European Opportunities maintained its annual dividend of 2.0p.
Looking ahead, shareholders have the opportunity to vote on the trust's continuation within the next 18 months. European Opportunities noted that its NAV total return has beaten the benchmark since inception, however its three, five and 10-year NAV total returns fall below it.
European Opportunities added that European equities are performing "relatively well" compare to US equities this year, noting that "Trump turmoil" has made them look more attractive.
"This, together with lower oil and gas prices (a particular positive for Europe), make for an encouraging backdrop for the company's investment strategy," said Chair Matthew Dobbs.
By Christopher Ward, Alliance News reporter
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