Manager Alexander Darwall uses intensive in-house research to identify firms with the potential to achieve superior long-term earnings growth.
Jupiter European Opportunities Trust (JEO) invests in European equities for long-term capital growth. Although its benchmark is the FTSE World Europe ex UK Total Return index, it generally has a significant UK exposure. Its report for the year to 31 May 2018 shows shareholders’ assets of £873 million.
Alexander Darwall, manager since launch in 2000, holds a multi-million pound stake in JEO shares. He uses intensive in-house research to identify firms with the potential to achieve superior long-term earnings growth. Favoured characteristics include: a strong management team that can explain its actions; proprietary technology and other factors that indicate a firm has a sustainable competitive advantage; a reasonable prospect that demand for the company’s products or services will continue to grow; and expectations that it will bene‑ t from structural trends. The sustainability and growth of free cash ow over the long-term is a critical consideration.
At the end of May JEO had shares in 33 companies. The top 10 accounted for 70.5 per cent of the portfolio, with the largest sectors being industrials (35.3 per cent), healthcare (19.9) and consumer services (19.2). Germany accounted for 33.5 per cent. UK-quoted holdings accounted for 16 per cent. Gearing was down from 7.7 per cent to 4.9 per cent over the year.
A net asset value total return of 10.2 per cent compares well with the 0.9 per cent return from JEO’s benchmark. The share price total return was 11.3 per cent. The dividend, a residual consideration, was held at 6.5p. A performance fee of 1.4 per cent li ed ongoing charges to 2.31 per cent.
Over 10 years to 31 May 2018, an investment of £10,000 in JEO would have grown into £26,350, compared with an average of £15,040 for the eight trusts (including JEO) in the AIC’s Europe peer group.