London, UK, 6 June 2017
Edison issues review on The European Investment Trust (EUT)
The European Investment Trust (EUT) aims to generate long-term capital growth from a diversified portfolio of European equities. Since August 2016, EUT has been managed by Craig Armour, who follows the disciplined Edinburgh Partners valuation-driven investment process, aiming to buy stocks that are trading on a five-year P/E multiple (Y5 P/E) of less than 11x. The manager is currently more cautious on the outlook for continental European equities as EUT's portfolio Y5 P/E is towards the high end of its 7x to 11x long-term historical range. As a result, EUT is currently ungeared and Armour is not planning to increase cyclical exposure in the near term. Near-term investment performance has improved versus the peer group and the benchmark, and EUT has increased or maintained its ordinary annual dividends since 2009.
EUT's current 11.8% share price discount to cum-income NAV is more towards the lower end of the last 12-month range of 8.9% to 18.1%. It compares to the averages of the last one, three and five years of 14.1%, 9.8% and 11.2%, respectively. There has been a noticeable narrowing of the discount since December 2016 and there is potential for it to narrow further if investment performance continues to improve or there is higher demand for European equities.
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