European Assets Trust (EAT) announced its annual results for the year end 31 December 2023. NAV total return was 8.2% for the year ended 31 December 2023, slightly behind the benchmark return of 9.8%. Share price total return was 4.5% while the declared dividend for 2024 is 5.90, up 2% from 2023.
Following the company’s disappointing performance in 2022, the board initiated a review of the investment strategy, philosophy and process adopted by the investment manager, with particular focus given to the strengths and weaknesses of its performance over the past ten years. This work was carried out by the investment managers supported by the wider resources within Columbia Threadneedle Investments. Following this review, a number of changes were made to the composition of the company’s investment portfolio including an increase in the number of stocks held, reflecting access to broader research capabilities within Columbia Threadneedle Investments. The implementation of these changes was coincident with the decision to take advantage of market opportunities to increase gearing. While it is early days since these changes were implemented, the initial results in the final quarter of 2023 and the early part of 2024 are encouraging.
Commenting on the performance and outlook, chair, Jack Perry noted:
“It was probably inevitable that after such a strong finish to the year we would enter 2024 with some volatility. The market had begun to look forward to the attractive combination of lower inflation leading to Central Bank easing, resilient economic growth and good corporate profitability. This is potentially optimistic given that achieving this balance is not without risks and has not often been achieved historically. Nonetheless when we look at our area of the market, European Small and Mid-cap companies, we think a positive outlook is not being reflected. Following two years of smaller company underperformance versus larger companies, valuations look attractive. History would suggest that these are good opportunities to buy into the long-term favourable characteristics of smaller growth companies.
“The investment managers are now fully integrated within the large Columbia Threadneedle Investment team and are benefitting from a deep pool of research. Idea generation is therefore felt to be more productive and is reflected in the higher portfolio turnover figures seen in this report as these new holdings are incorporated. This also helped provide the investment managers with the confidence to gear the portfolio following the October market sell-off. We would expect them to continue to do so as they find attractive opportunities using the research talent at their disposal and given the strong long-term outlook that our asset class has.”
EAT : European Assets Trust looks to the future after solid year