IThe trust saw a 40% increase in its NAV over the last 12 months, but the manager is confident this is only just the beginning.
The trust has benefited from cyclical improvements across the continent. Beckett said: "We took the portfolio more towards value, and cyclicality, and we increased exposure to domestic Europe, and that’s worked. “
Beckett also believes that this growth story has further to go, and he added: “We’ve had a good return but it’s still down from 2007 and you can’t say that for UK smaller companies, UK larger companies, European larger companies or the US.
“We’re still trading at a significant discount to the US and Asian smaller companies because everyone was concerned about the Eurozone and whether it would survive. Now it appears it will survive and it’s starting to improve and I think you’ll start to see earnings upgrades for the first time for a couple of years.”
The portfolio is built from the bottom up, but Beckett said that politics can still create opportunities. He highlighted one trend as the increased confidence in Italy.
He explained: “The demise, or apparent demise, of Berlusconi has been key. I think people have been waiting for that for a long time. It means maybe finally we will get the labour and taxation reform that Italy desperately needs.”
This optimism is reflected in the fund’s gearing, which is allowed up to a maximum of 15% and is currently just over 10% geared.
Beckett highlighted that the trust has in the region of 6% in unquoted names, which needs to be taken into account when looking at the gearing. However he added: “We’re still optimistic, and hence that’s reflected in the gearing.”
