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Investment Trust Watch: Darwall delivers a European opportunity
Shares in Alex Darwall's top-performing Jupiter European Opportunities trust trade on their biggest discount for 19 months.
Bargain hunters have got two leading European trusts to consider this week.
Whether it’s a hangover from the ‘bear raid’ on Wirecard, a top holding, in January, or the retreat in ‘growth’ stocks in the face of a resurgence in ‘value’ investing, Jupiter European Opportunities (JEO ) has been under the cosh of late.
Under manager Alex Darwall, JEO remains the best performing European trust over five years with a 99.6% total shareholder returns. Since the start of the year, however, it’s been the worst performer in its sector with a net asset value decline of 4.4%, which isn’t so bad, but the shares have tumbled 11%, falling to a discount from a small premium in January.
By Wednesday’s close the shares stood 4.4% below NAV compared to the average premium of 1.6% in the past year. That gives it a low Z-score of -3.9 and makes it the ‘cheapest’ trust in our table from Numis Securities.
Just to recap, a Z-score is a measure used by analysts to assess how far an investment is trading outside its normal 12-month range. Roughly speaking, a Z-score below -2 is considered ‘cheap’ and above 2 is viewed as ‘expensive’.
Rival Henderson European Focus (HEFT ) joins JEO in the cheap seats. Its discount has doubled since the end of January when manager John Bennett surprised the City with a bearish declaration that he wouldn’t make money for investors this year.
The discount on Scottish (SCIN ) investment trust, a low-charging but low performing global fund, has widened to a four-year low of 14%, giving it a Z-score of -3.5. It’s possibly a reaction to share sales by Aviva, the pension giant.
Also out of favour at the moment is Merchants (MRCH ). The highly geared but high-yielding UK equity income trust lost its small premium rating last month and finished Wednesday 8% below net asset value, according to Numis. As highlighted in this month’s Investment Trust Insider this comes at a time when investors are scrutinising equity income funds and their exposures to stocks with vulnerable dividends.
|'Cheap' trusts||Share price premium (- discount) to net asset value %||12-month average premium (- discount) %||Z-score|
|Jupiter European Opportunities (JEO)||-4.4||1.6||-3.9|
|Henderson European Focus (HEFT)||-7.0||0.7||-3.6|
|Scottish IT (SCIN)||-14.2||-10.3||-3.5|
|Blackstone GSO Loan Financing (BGLF)||-14.6||-1.0||-3.4|
|Martin Currie Global Portfolio (MNP)||-3.0||-0.4||-3.4|
|Law Debenture (LWDB)||-11.0||5.4||-3.3|
|Jupiter Green (JGC)||-12.8||-4.5||-3.3|
|BH Global - £ (BHGG)||-10.8||-6.1||-3.1|
|Witan IT (WTAN)||-6.8||-0.4||-3.1|
|JPMorgan Overseas (JMO)||-11.8||-8.1||-3.1|
|New India (NII)||-15.9||-10.2||-3.0|
|Murray Income (MUT)||-9.4||-6.8||-3.0|
|World Trust Fund (WTR)||-17.5||-12.8||-3.0|
|Aberdeen New Dawn (ABD)||-15.8||-12.3||-2.9|
Source: Numis Securities
Aurora (ARR ) makes another appearance in our second table of ‘expensive’ trusts. It raised £8.1 million this week with a placing of 4.86 million shares issued at a premium of 1.5% to NAV. Investors who backed the fund raising are betting that Gary Channon of Phoenix Asset Management, the trust’s new manager, can revive the trust which lost its way under previous manager James Barstow. Channon is a value investor so that at least fits in with the times. I highlighted the fund in our ‘Specials’ feature in Investment Trust Insider in January.
|'Expensive' trusts||Share price premium (- discount) to net asset value %||12-month average premium (- discount) %||Z-score|
|Aurelius AG (AR4)||43.0||18.0||3.7|
|JPMorgan Elect - Managed Income (JPEI)||1.2||-2.4||3.3|
|BB Biotech (BION)||-1.5||-15.8||2.5|
|Burford Capital (BURF)||93.4||46.7||2.4|
|Tritax Big Box REIT (BBOX)||10.6||5.5||2.2|
|Sequoia Economic Infrastructure Inc (SEQI)||9.8||7.1||2.0|
|BlackRock Commodities Income (BRCI)||6.3||1.5||1.8|
|European Real Estate (ERET)||-15.1||-33.9||1.6|
|Alpha Real Trust (ARTL)||-28.8||-36.1||1.6|
|Athelney Trust (ATY)||0.8||-7.4||1.6|
|Industrial Multi Property Trust (IMPT)||-40.6||-59.5||1.5|
|CATCo Reinsurance Opportunities Fund (CAT)||0.6||-2.4||1.5|
|Phaunos Timber (PTF)||-30.4||-35.9||1.4|
|Reconstruction Capital II (RC2)||-25.8||-42.0||1.4|
Source: Numis Securities
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Look up the shares
- BB Biotech AG
- Burford Capital Ltd
- Tritax Big Box REIT PLC
- Alpha Real Trust Ltd
- Industrial Multi Property Trust PLC
- CATCo Reinsurance Opportunities Fund Ltd
- Reconstruction Capital II Limited
Look up the investment trusts
- Jupiter European Opportunities (Ordinary Share)
- Henderson European Focus Trust (Ordinary Share)
- Scottish Investment Trust (Ordinary Share)
- Blackstone/GSO Loan Financing (Ordinary Share)
- Martin Currie Global Portfolio (Ordinary Share)
- Law Debenture Corporation (Ordinary Share)
- Jupiter Green (Ordinary Share)
- BH Global GBP (Ordinary Share)
- Witan (Ordinary Share)
- JPMorgan Overseas (Ordinary Share)
- New India (Ordinary Share)
- Murray Income Trust (Ordinary Share)
- World Trust Fund (Ordinary Share)
- Aberdeen New Dawn (Ordinary Share)
- Merchants Trust (Ordinary Share)
- JPMorgan Elect Managed Inc (Ordinary Share)
- Sequoia Economic Infra Income (Ordinary Share)
- BlackRock Commodities Income (Ordinary Share)
- European Real Estate IT (Ordinary Share)
- Athelney Trust (Ordinary Share)
- Phaunos Timber (Ordinary Share)
- Aurora (Ordinary Share)
More from us
- Top Alex Darwall stock struck down in 'bear' raid
- Jupiter bags £12.6m fee as Darwall delivers strong performance
- Henderson's Bennett: I won't make money this year
- Investment Trust Watch: Bennett's chilling warning
- John Bennett: 'I am worried I can't find bargains'
- Scottish Investment Trust chair departs as underperformance persists
- Scottish investment trust (SCIN) sheds manager
- Merchants' Gergel: the 'great opportunity' in BP and Shell
- Merchants' Gergel worried by price of 'safe' stocks
- Merchants buys Antofagasta in bet on copper revival
- Investment Trust Watch: UK’s worst fund gets Woodford fee
- Veteran bargain hunter John Walton pops up at Aurora
- ISA 2016: can UK equity income still shine?
- The Specials: 8 great, overlooked investment trusts
- Pension fund sell-off hits investment trust shares
- Six investment trusts for a value-style revival
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