Strong returns from European small-cap specialist

TR European Growth Trust (TRG) has enjoyed an exceptionally strong period of recent share price and NAV performance, posting gains of c 50% over 12 months to 30 April. While returns from all overseas investments have been boosted by the weakness of sterling since the UK’s Brexit referendum, TRG’s outperformance has been assisted by a focus on better-value cyclical stocks, and the decision of lead manager Ollie Beckett to increase gearing in the second half of 2016. The trust invests in European (ex-UK) smaller companies, with a particular focus on those at the lower end of the market cap spectrum, where both rewards and risks may be higher. Because of this, TRG has a longer stock list than peers. While the discount to NAV has narrowed somewhat, it remains at c 9% compared with an average of 0.7% for the investment company universe.