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Trust Insider: all-you-can EIT - 2014's best euro strategy

by James Carthew on Mar 04, 2014 at 00:01

Trust Insider: all-you-can EIT - 2014's best euro strategy

In net asset value (NAV) terms at least, the best performing European, large cap investment company so far this year is European Investment Trus t (EIT), a fund managed by Edinburgh Partners.

It caught my eye because EIT also trades on the widest discount of any of the European large cap investment companies. Over the year to date, EIT’s NAV is up 4.7% versus an average of 2.4% for its peers and 0.9% for MSCI Europe and it trades on a discount of 11.3% versus an average of 6.4% for the peer group.

EIT is a decent size with a market cap of £313 million and gross assets of £353 million. The management fee is 0.55% and, thanks to its size, its ongoing charges ratio is 0.59%. Edinburgh Partners has had the management contract for the fund for four years now (since 1 February 2010).

Over that period they have done OK; ahead of their benchmark (the FTSE All World ex UK Index) but behind some of the other funds in the peer group, notably Jupiter European Opportunities (JEO). In the past year however, there has been a marked improvement and they rank second only to Henderson European Focus and are more than 5% ahead of JEO.

Doing well in this sector is a major achievement. By and large, the closed-end funds operating in this sector trounce the performance of open-ended funds investing in the same area.

For the year ended 31 December 2013, the average Europe ex UK large cap investment company returned 28.5% and the equivalent average open ended fund returned 26.1% (according to the data supplied by Lipper to the IMA), over five years the figures were 97.9% versus 65% and over 10 years they were 210.1% versus 138.2%.

JEO skews the closed-end fund numbers a bit and, strictly speaking, is closer to a Europe inc UK fund, so for fairness’ sake, it might be worth pointing out the equivalent one, five and 10-year performance numbers for the average Europe inc UK open-ended fund are 25.8%, 77.5% and 126.6%. For EIT, whose long-term numbers are let down by the previous manager, the figures are 39.5%, 81.3% and 118.7%.

EIT used to be managed by F&C but its performance disappointed for quite a while.

At the end of 2009, when EIT’s board was wondering who might turn the company around, Edinburgh Partners caught their eye. It had what was then a £200 million open-ended fund investing in European large caps, which had built up a decent track record over the five years since its 2004 launch.

EIT’s new manager was Dale Robertson, Edinburgh Partners’ founding partners in 2003. Previously he worked at Scottish Widows and Edinburgh Fund Managers. In 2011, Edinburgh Partners launched a pan-European open-ended fund for Robertson, and the two open-ended funds now have assets of circa-£800 million, the bulk of which is in the pan-European fund.

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