Following consultation with shareholders, the European Opportunities Trust (EOT) has proposed a range of exit options as the trust starts to wind up.
The trust has delivered positive total returns over the past one, three, five and 10 years, but has persistently underperformed the average IT Europe sector peer, as well as the MSCI Europe, according to data from FE fundinfo.
Following a range of actions from the board over the past three years to enhance shareholder value, including share buybacks and tender offers, the trust has continued to underperform
“The board acknowledges the ongoing performance challenges and considers that it is likely that the company will not meet the performance condition to 31 May 2026 under the company’s performance-related tender offer mechanism,” the team said.
Matthew Dobbs, chair of the company, said: “After consulting with shareholders, the board is pleased to present proposals which offer a range of choices to meet the differing requirements of the disparate elements of the shareholder base.
“Those shareholders who wish to continue investment in European equities have a choice of investment structures and managers, while those who prefer to exit for cash have an uncapped opportunity to do so.”
The default option is to roll into JPM European Growth and Income (JEGI), for investors interested in maintaining long-term exposure to European equities.
JEGI seeks to deliver capital growth from a diversified portfolio of companies in European equity markets and pays an annual dividend of four per cent of its Net Asset Value (NAV).
The JP Morgan portfolio has been the top performer in the IT Europe sector over the past one, three and five years, according to FE data. Over 10 years, it has delivered a 198% total return, beating the MSCI Europe average by more than 35 percentage points.
This will represent the seventh investment trust consolidation that JP Morgan has been involved with in the last four years.
Rita Dhut, chair of JEGI, said: “Enthusiasm for Europe’s world-class companies is rising and we are delighted that the board of EOT has selected JEGI as the default rollover option for its shareholders.
See also: Three European equity managers: How we diversify portfolios in today’s markets
This transaction provides an opportunity for growth and will allow JEGI to appeal to an even wider array of investors.”
Simon Elliot, head of investment trusts at JP Morgan, added: “We believe that this will allow the trust to appeal to a wider range of investors, while benefiting existing shareholders through a lower OCR and greater liquidity.”
Another option presented to shareholders was a rollover into the LT European Opportunities fund (LEO), a sub-fund of Liontrust with an investment strategy.
This follows the announcement earlier this year that River Global, the current owner of trust manager Devon Equity Management Limited, will be selling its investment management business to Liontrust.
LEO will follow an investment objective and policy “which is, in all material respects, the same as EOT”, including being run by the same lead manager, Alexander Darwell.
Other options for shareholders include a cash exit option, offered at a two per cent discount to EOT’s residual NAV.
See also: TILLIT scraps Darwall’s European Opportunities trust over ‘structural challenges’
