European Assets Trust cuts dividend as it underperforms benchmark

(Alliance News) - European Assets Trust PLC on Thursday said its net asset value total return fell and underperformed its benchmark index during 2024, with the longer-term performance also "disappointing".

The London-based trust, which invests in small to mid-cap EU companies, said its net asset value total return was negative 0.8% in the 12 months to the end of 2024.

This compared to the benchmark MSCI Europe ex UK Small Mid Cap Net Return Index which gained 2.4%.

"Stock selection was the main contributor to underperformance relative to the benchmark, while the 5% weakening of the euro vs sterling detracted significantly from the sterling absolute returns," said Chair Stuart Paterson.

"The longer-term performance of the company has also been disappointing. The sterling NAV total return for the five- and ten-year periods ended 31 December 2024 are 9.3% and 75.8% respectively. These compared to 26.3% and 137.1% for the sterling benchmark total returns for the same periods."

The sterling NAV per share fell 6.6% to 91.82 pence on December 31 from 98.31p at the end of 2023.

The firm aims to pay dividends at an annual rate of 6% of the closing NAV of the preceding year.

Therefore, it has cut its total dividend for 2025 to 5.52 pence, down 6.4% from 5.90 pence in 2024.

"In small cap, unlike large cap, value stocks outperformed growth and quality, and this was unhelpful given our focus within the company's portfolio on stocks of high quality. This style headwind has been a feature over the last three years, since the invasion of Ukraine, and returns were further worsened by disappointing stock selection," said Chair Stuart Paterson.

Looking ahead, Paterson expects the manager to "clearly demonstrate" that measures taken over the last 18 months are translating into improved performance against the benchmark.

"This is coupled with the board's recognition of the company's longer-term underperformance," said the chair. "With this in mind, and given the more favourable outlook for Europe, the board remains focused on delivering performance for shareholders and is alert to considering all opportunities for the company to achieve this."

Shares in European Assets Trust were down 3.3% at 78.53 pence in London on Thursday afternoon.

By Michael Hennessey, Alliance News reporter

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