The European Smaller Companies Trust - An attractive entry point to a small-cap specialist

In contrast to many industry participants, The European Smaller Companies Trust’s (ESCT’s) manager, Ollie Beckett, is positive about the prospects for European small-cap companies as he believes that low valuations discount a recession. Although small-cap equities have outperformed large caps in Europe over the long term, unusually, small caps are currently in their third consecutive year of underperformance in anticipation of an economic downturn. The trust’s cyclical bias and a double-digit share price discount to NAV suggest a potentially attractive entry point if the European economy proves more resilient than many expect.