Investment trust insider on Montanaro European – James Carthew: More to come as Montanaro leads the European rally
The quality growth stocks in Montanaro European Smaller Companies are reaping the rewards of interest rate cuts and uncertainty over the eurozone economy.
Looking at the European small-cap sector recently, I was pleased to see Montanaro European Smaller Companies (MTE) back on the top of the performance tables, and not just ahead of its immediate rivals but also leading the wider group including large-cap-focused funds.
I realise the one-year rebound with net asset value (NAV) up nearly 30% and share price almost 33% higher is a bit misleading as this time last year European trusts were in a funk. Nevertheless, the Montanaro trust can claim to be the best-performing of its peers over 10 years with NAV advancing 257% and the shares delivering a 272% total return.
Why was I looking? We had a competition at work to predict which would be this year’s investment company winners and one of my choices was MTE. Its investment approach is to try to identify high-quality companies, operating in areas of structural growth, and well-managed from a business and ESG perspective, and then buy these when they trade at attractive valuations.
My rationale was that 2024 could be a year where falling interest rates would revive interest in growth stocks, but investors would still be nervous about the state of the economy, so quality companies would be favoured. However, things would not be so bad that they would ignore the bargains in smaller companies.
To some extent, this scenario has played out… read more here