European Opportunities Trust cuts the fee it pays fund manager Alexander Darwall after another year of underperformance largely caused by the slump in its top holding Novo Nordisk; Murray International beats its benchmark in the first half; plus results and updates from European Assets, Invesco Bond Income Plus, Vietnam Enterprise and JPMorgan Emerging Europe.

European Opportunities Trust (EOT) has cut the fee it pays fund manager Alexander Darwall after another year of underperformance largely caused by the slump in its top holding Novo Nordisk. Net asset value (NAV) fell 3.7% in the year to 31 May with a shareholder loss of 0.9% compared to the 8% gain in the MSCI Europe index that leaves the £432m trust underperforming on all time periods up to 10 years and at greater risk of failing a continuation vote next year, or if it survives that, having to offer another 25% tender offer like the one undertaken in June. The company, in which activist Saba Capital retained a 4.7% stake earlier this year, has negotiated a reduced tiered management fee. From 1 October it will pay Darwall’s firm Devon Equity Management 0.65% a year on net assets up to £400m; 0.6% between £400m and £600m and 0.55% above £600m. Devon, which is merging with River Global, was previously paid 0.8% up to £1bn.

Matthew Read, senior analyst at QuotedData said: “It’s been another difficult year for European Opportunities Trust and it is little surprise that Novo Nordisk – EOT’s largest holding by some distance – was the biggest driver of the underperformance. There is little doubt that Novo Nordisk has been a major success story for EOT in recent years. The company has led the way on GLP-1 anti-obesity drugs, propelling it up EOT’s rankings to become the trust’s largest holding by some distance, but its early-mover advantage has been eroded as competition has intensified. Against this backdrop, EOT’s significant overweight has weighed on its performance, eating further into its long-term performance record.

“However, EOT’s manager believes the share price reaction to changes in the anti-obesity space is overdone. It points out that the anti-obesity opportunity is vast and has diverse needs, meaning that many different drugs will be required and there is still a strong opportunity for Novo Nordisk’s current offering. It believes that Novo Nordisk has a strong pipeline with compelling candidates for the next generation of GLP-1 drugs. The company also has the benefits of its huge scale and global reach which will allow it to exploit these opportunities. Eli Lilly’s decision to hike the price of Mounjaro in the UK may, ironically, kick start a price war in this area as consumers trade off efficacy against price, re-opening an opportunity for Wegovy.

“Returning to EOT, we are pleased to see that its board recognises the disappointment that performance has caused shareholders and that it has engaged with the manager on this. Both are convinced that the trust’s high conviction approach will be vindicated in the longer term, but they have around 18 months to convince shareholders. Not only is a continuation vote due at the 2026 AGM, but shareholders have also been promised a performance related tender if the trust’s NAV total return is below that of its benchmark over the three-year period ending on 31 May 2026.”  

Murray International (MYI), Aberdeen’s £1.7bn global equity income trust, convincingly beats the 1% rise in its index benchmark in the first half with a 6% total investment return underpinning an 11.6% total return to shareholders. Key contributors to this “robust performance” were US tobacco giant Philip Morris International, central American airport operator Grupo ASUR, Hong Kong Exchanges and Clearing, Singapore Telecommunications and European utility Enel. The biggest detractors were Merck & Co, Bristol Myers Squibb, Diageo, Pernod Ricard and Taiwanese semi-conductor company GlobalWafers. New positions were taken in Anglo-Australian mining giant Rio Tinto, Indian IT service company Infosys and Italian financial services provider Intesa Sanpaolo. The 5%-yielder declared two dividends of 2.6p per share during the period.

James Carthew, head of investment company research at QuotedData, said: “It has been great to see returns pick up at Murray International recently. If you want income from a global equity portfolio, but you are concerned about the concentration risk of world indices (which are dominated by a handful of US mega caps), this is a pretty good option.”

European Assets (EAT) publishes its last half-year results before merging with European Smaller Companies Trust (ESCT). Once again the £344m investment trust underperformed with a total investment return of 13% that trailed the 19.3% return from the MSCI Europe ex-UK Small Mid Cap index. However, shareholders saw a total return of 18.9% as the share price discount to net asset value narrowed after the merger announcement in June. The 5.8%-yielder declared a fourth quarter dividend of 1.38p per share taking the total payout for the year to 5.52p.

James Carthew said: “Another very poor set of numbers from European Assets backs up the board’s decision to seek a merger with The European Smaller Companies Trust. It is only a shame that it took so long to reach this conclusion. Had the merger happened five years ago, EAT investors would have been 76 percentage points better off.”

Vietnam Enterprise Investments (VEIL) starts a monthly update of its share buybacks to manage its discount, currently 16.5%. In July it spent $30.9m buying back 1.9% of its shares at an average 15% discount. So far this year it has paid just over $100m purchasing 6.9% of its shares at an average 20.6% discount. The company has a market value of £1.2bn.

Invesco Bond Income Plus (BIPS), one of a group of listed debt funds whose shares are trading at small premiums due to demand from income investors, says it is on track to deliver its 12.25p per share dividend target after the 7%-yielder posted two dividends of 3.0625p in the first half, up 6.5% on a year ago. Half-year results show a 3.4% total underlying investment return that underperformed the 3.8% from its ICE BofA European Currency High Yield index benchmark.

JPMorgan Emerging Europe, Middle East & Africa Securities (JEMA) says Russia’s VTB Bank is seeking to avoid paying its 2024 dividends to JPMorgan bank accounts, arguing that they should be offset against the $439m judgment it obtained against eight JP Morgan entities and JEMA, which JP Morgan is appealing. The ‘S’ account holding dividend payments from Russian companies to JEMA held £43.2m at 13 August with an additional £9.7m of dividends announced but not received. This includes approximately £850,000 due from VTB Bank. The company reiterated its view that it may never recover the dividends which are not accounted for in its net asset value. Shares in the former JPMorgan Russian Securities stand on a huge 372% premium over NAV partly on speculation that the dividends will be recovered.