The Trust marginally underperformed during September in a flattish market. Markets were characterised by investors beginning to price in ‘second wave’ risks.

Our key positions that outperformed during September were AMS, NEXI and Stillfront. AMS was boosted by Osram, a company they are in the process of acquiring, lifting full year guidance to reflect a strong, auto-led recovery. NEXI, the Italian payments company, closed in on a deal to acquire its domestic peer SIA during September and the shares moved higher to reflect likely earnings accretion from such a deal (the deal was announced in October). Finally, Stillfront, the Swedish gaming company announced an accretive acquisition as well as revealing medium term guidance well in excess of consensus expectations.

Our biggest detractors during the month included Telecom Italia, Unicredit and Zur Rose. Telecom Italia, although we see potential upside, remains a complex investment and investors seem unwilling to price in any benefit from the announced deal to merge their fibre business with that of OpenFibre. We will remain patient. Unicredit suffered from continued negative sentiment surrounding the banking sector and Zur Rose continued to suffer from profit taking.

During the month, we sold positions in Scout24 and GVS, whilst initiating a new position in Aixtron. Scout24, the German property portal, is a high-quality business but one that we bought at significantly lower levels back in 2019. We now see the equity as being fully valued. GVS, the Italian filtration business, has performed very well since IPO and we felt it was right to take profits. Aixtron, the German semiconductor equipment business, seems to be well positioned for a number of technological innovations that are underway and is inexpensively valued.

We are confident in our positioning and will continue to retain balance in our exposures by considering two types of business for investment; those where we see high and sustainable returns that are undervalued by the market and those companies where we can see a material improvement in medium term business prospects.