The European Smaller Companies Trust: Half-year results
Ollie Beckett, Portfolio Manager of The European Smaller Companies Trust discusses the half-year results, including the key drivers of performance, changes made to the portfolio and investing in sustainable companies. Ollie also provides his outlook for European smaller companies.
16 Mar 2023
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Key takeaways:
- The Company’s net asset value (NAV) total return was 9.3%, outperforming the benchmark return of 6.0%. Our exposure to more sensibly-priced growth and self-help investment cases made it more resilient than the benchmark.
- We are pleased to declare an interim dividend of 1.45p per ordinary share – a 16.0% increased on the interim dividend paid last year. We remain confident that the Company will continue to deliver progressive dividend growth as the underlying companies continue to generate healthy cash flow.
- While uncertainty remains there is room for optimism: the impact of the energy shortage hasn’t been as dramatic as feared and there are indications that inflation may be peaking. In addition, the reopening of China should also benefit consumers and boost global growth.
Past performance does not predict future returns
Related insights
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
Marketing Communication.
Important information
Please read the following important information regarding funds related to this article.
Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser. This is a marketing communication. Please refer to the AIFMD Disclosure document and Annual Report of the AIF before making any final investment decisions.
- If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
- Where the Company invests in assets that are denominated in currencies other than the base currency, the currency exchange rate movements may cause the value of investments to fall as well as rise.
- Most of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell, and their share prices may fluctuate more than those of larger companies.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
- The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
- The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.
- Using derivatives exposes the Company to risks different from - and potentially greater than - the risks associated with investing directly in securities. It may therefore result in additional loss, which could be significantly greater than the cost of the derivative.
- If the Company seeks to minimise risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or negative for performance.
Specific risks
16 Mar 2023
1 minute watch
1 minute watch
- The Company’s net asset value (NAV) total return was 9.3%, outperforming the benchmark return of 6.0%. Our exposure to more sensibly-priced growth and self-help investment cases made it more resilient than the benchmark.
- We are pleased to declare an interim dividend of 1.45p per ordinary share – a 16.0% increased on the interim dividend paid last year. We remain confident that the Company will continue to deliver progressive dividend growth as the underlying companies continue to generate healthy cash flow.
- While uncertainty remains there is room for optimism: the impact of the energy shortage hasn’t been as dramatic as feared and there are indications that inflation may be peaking. In addition, the reopening of China should also benefit consumers and boost global growth.