The F&C European Assets investment trust delivered a 7.6 per cent share price total return in the first six months of 2014, in spite of a changeable first half in the region.
In its unaudited interim results the trust also recorded a net asset value total return of 6.6 per cent in euro terms, equivalent to 2.5 per cent in sterling, which lagged the Euromoney Smaller European Companies (ex UK) index return of 10.8 per cent.
Manager Sam Cosh suggested, however, that the first half performance had been “ultimately positive”. The net assets of the trust increased in the period from €209.1m in December 2013 to €246.7m six months later.
He noted: “The first half of this year has been more confusing with investment trends changing from a buoyant first quarter to more of a cautious second quarter as leading indicators, while still remaining positive, softened.”
The manager added that while the team were happy the NAV had moved forward in total return terms at 2.5 per cent, it was disappointing that it had lagged the benchmark.
He attributed the relative poor performance to a “combination of our investment style and some difficult stock performances”. Mr Cosh noted: “This can be demonstrated well by our exposure to Italy which contributed to the majority of the underperformance.”
But he added: “Given our high conviction investment style focused on quality businesses we must accept and indeed expect poor periods of relative performance, especially during strong markets.
“With this strategy it should be no surprise to lag a strong market, particularly when this has been led by lower quality assets. Indeed one of the characteristics of our recent performance that has been surprising is that we have managed to perform well in such a strong market since the recovery in European equities.”
