However, Devlin adds that market expectations have, in some cases, got ahead of themselves and European markets require selectivity even though there is an improving outlook for European companies.
He admitted that the trust’s performance has been weak recently – it sits seventh out of eight trusts in the European investment trust sector over three years, having delivered an NAV return of 31.9% against a sector average of 47.1%. He blamed poor stock selection, where positions in consumer services, technology and telecoms were ‘challenging’.
The worst performer in the trust during September was Ryanair.
Highs and lows
Sector allocation was more successful as the trust benefitted from a higher weighting in technology and a relatively low weighting to oil and gas.
The 11% gearing also contributed to performance as markets rose. Equally, selected positions in Russia, including Mail.Ru and Sberbank, in certain financials, including KBC and Société Générale, also helped.
The trust continues to have its highest weightings in consumer services, financials, technology, consumer goods and healthcare, and lowest weightings in basic materials, telecoms, oil & gas, industrials and utilities.
Devlin concluded: "Within Europe, we continue to see improving sentiment both at the corporate level and also in terms of consumer activity in certain countries. The forthcoming issue around tapering is likely to create market volatility which in itself can generate opportunities."
