Daily Brief Financials: USD, The Diverse Income Trust PLC, Donegal Group , JPMorgan European Smaller Comp and more

• Discussion on the impact of elections on FX and various hedges
• Focus on trade and fiscal policies as key factors influencing FX
• Potential scenarios and dominant teams in different election outcomes, with Republican sweep seen as favorable for dollar strength

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only.

The Diverse Income Trust (DIVI) is a member of the 18-strong AIC UK Equity Income sector. It has a differentiated multi-cap income strategy and therefore its performance can differ meaningfully from those of its peers. Managers Gervais Williams and Martin Turner at Premier Miton Investors are very bullish on the outlook for UK stocks, which they believe can outperform overseas mainstream equity indices due to very attractive valuations and income prospects. They note that with global profit margins at all-time highs and increased geopolitical tensions, there could be a change in investor behaviour, with increased demand for income rather than capital growth strategies, which have dominated the investment landscape for the last few decades.

• Buy Donegal Group “B” shares at a $2 discount to “A” shares
• “B” shares have 10X voting rights but are priced lower, potential for rebound
• Low average volume of “B” shares may impact liquidity and potential for price rebound; catalyst for trade is pricing reversion to $13-$14 range

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

JPMorgan European Discovery Trust (JEDT) invests in European small-cap companies (excluding UK). European small caps have outperformed most other markets over the long term, although they underperformed large caps in 2022 and 2023, as the sector was confronted with a number of challenges. Against this unfavourable backdrop, JEDT underperformed as a result of asset allocation decisions. Following a strategic review, JEDT’s board appointed three new managers, Jon Ingram, Jack Featherby and Jules Bloch, who replaced Francesco Conte and Edward Greaves with effect from 1 March 2024. The trust’s relative performance has improved, and it is outpacing its peers. The new team is very excited by the outlook for the sector, and for JEDT. Several previous headwinds are now supporting European small caps, and history suggests that current low valuations are due for a substantial re-rating.