6th Dec 2018 10:39
LONDON (Alliance News) - JPMorgan European Smaller Cos Trust PLC reported a rise in interim net asset value per share as the trust outperformed its benchmark in the period.
At September 30, JPMorgan Euro Smaller Cos NAV per share was 460.7 pence compared to 438.9p at March 31, a 5.0% rise.
The trust's net assets also increased 5.0% in the six months to September 30 to GBP737.0 million from GBP702.2 million.
JPMorgan Euro Smaller Cos's NAV total return in the same period increased 6.2% compared to the 4.8% total return of its benchmark, the Euromoney Smaller Companies (ex UK) index.
The outperformance was driven by Dutch speciality chemicals and food ingredients distributor IMCD, as it continued to "gain scale" in North America following a number of acquisitions.
Danish brewer Royal Unibrew contributed to the trust's performance with "increased demand" brought on by "prolonged good weather" over the summer.
Austrian IT services management company S&T also aided the trust's outperformance due to structurally growing end-markets and improving revenue mix.
Detractors included French liquid and gas storage and distribution company Rubis, as it suffered from political disruptions in Turkey and Iran. Swedish cosmetics retailer Oriflame's performance was an offsetting force as it faced significant foreign exchange headwinds and increasing pricing pressure from competitors.
Finnish consumer packaging manufacturer Huhtamaki hurt the trust's performance following raw material price inflation and price pressure from major customers.
In the period, Healthcare became JPMorgan Euro Smaller Cos' largest overweight sector and the Oil sector was moved from an underweight to an overweight position.
The Industrial Engineering sector, however, was moved to an underweight position having been the largest sector overweight at the start of the period.
The Netherlands remained the portfolio's largest country overweight, while Germany became the largest country underweight.
The trust paid an interim dividend of 1.2p per share, flat on the year before.
Investment Managers Francesco Conte and Edward Greaves said: "The recent rise in the US 10 year bond, at one point to above a 3.2% yield, reduced the appetite for stocks across all geographies, including Europe. On this side of the Atlantic, fears about the Italian budget and continued uncertainty around Brexit added to the general malaise.
"With Italian 2 year yields close to 1%, bond markets are signalling that political risks are manageable. In summary, we believe the volatility in October was a long overdue correction, rather than start of a more prolonged downturn in markets.
"As valuations became more attractive by the end of October we started raising our gearing, finding opportunities in the industrial and automotive sectors in particular."
Shares in JPMorgan Euro Smaller Cos were down 2.3% Thursday at 349.14 pence each.
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