JPMorgan European Growth & Income (JEGI) has reported another good year of performance, extending its track record of outperformance over its benchmark and peers to five consecutive years. For the year ended 31 March 2025, the trust delivered a NAV total return of 3.5%, ahead of the benchmark return of 2.5% and well above the peer group average of -0.4%. Over three and five years, JEGI’s NAV returns were 36.1% and 115.3%, respectively, compared to 25.4% and 76.6% for the benchmark, and 23.8% and 66.4% for the peer group.
The share price total return was even higher at 11.8%, reflecting a narrowing of the discount with the trust’s shares ending the period at a 5.5% discount to NAV, down from around 10% earlier in the year. The discount has since narrowed further to 3.1%.
Sector-leading consistency
JEGI has now outperformed both its benchmark and the broader European investment trust peer group over one, three, and five years, making it the top performer in its AIC sector over all three time frames. The board highlighted the consistent application of the investment process and active positioning as key contributors to that success, particularly amid a volatile backdrop for European markets.
Dividend held as board backs underlying strength
The company paid a total dividend of 4.8p per share during the year, equivalent to a 4.3% yield at the 31 March 2025 share price of 111.0p, and the board has committed to maintaining this dividend level for the current financial year to 31 March 2026. Dividends will continue to be paid quarterly.
Net revenue declined 11.2% to £12.1m, reflecting lower dividends received from some portfolio companies. The board noted that, where necessary, dividends will be paid from distributable capital reserves.
Stock selection drives outperformance
Performance was again driven by strong stock selection, particularly in Financials. UniCredit and Allianz were standouts, supported by robust earnings growth and capital returns. The trust also benefited from holdings in Heidelberg Materials and SPIE, with the latter positioned to gain from Germany’s €500bn infrastructure stimulus.
Elsewhere, the managers initiated a position in Heineken, citing improving margins and a renewed buyback programme. Inditex and Bekaert were sold, and the trust reduced exposure to cyclical consumer names. The portfolio maintains its tilt toward value, quality, and operational momentum, and continues to trade at a discount to the market on valuation metrics.
Not owning certain high-profile defence stocks such as Rheinmetall detracted from relative returns during the year.
Gearing remained modest at 4.3%, unchanged from the prior year.
Discount narrows and buybacks continue
As noted above, the discount narrowed from around 10% to 5.5% over the financial year, aided by improved sentiment toward European equities, the trust’s strong relative performance and JEGI’s repurchase activities – a total of 7.15m shares were bought into treasury during the year, with a further 250,000 shares repurchased since the year-end. JEGI’s current discount stands at 3.1% compared to a peer group average of 6.7%.
Outlook
The managers believe the outlook for European equities is improving, with ECB rate cuts, disinflation, and major fiscal stimulus (notably in Germany) creating an attractive backdrop. European growth forecasts are starting to converge with those of the US, and the managers remain confident in their ability to find opportunities that meet their core criteria of valuation, quality, and operational momentum.
[QD comment Matthew Read: JEGI continues to deliver consistent outperformance and a reliable dividend. Its NAV and share price returns beat both the benchmark and peer group over one, three, and five years, and its performance is likely a contributing factor to its narrowing discount. Strong stock selection has been a factor in its outperformance and JEGI could be well positioned for this to continue if the current tailwinds for Europe persist.]
