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European Opportunities Trust: October 2020 update

Senior Investment Analyst Kate Marshall shares our analysis on the manager, process, culture, cost and performance of European Opportunities Trust.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

  • Alexander Darwall is an experienced and longstanding investor in the European sector
  • He is a high-conviction investor and has adhered to the same investment process throughout his investing career
  • The manager has an impressive long-term track record, but an investment in Wirecard has contributed to weaker performance so far this year

How it fits in a portfolio

As its name suggests, European Opportunities Trust invests in companies from across the European continent, based in countries such as France, Germany, Denmark and Spain, as well as the UK. It could be considered for the European portion of a broader global investment portfolio, and for those seeking long-term growth potential. The trust invests in a relatively small number of companies, which adds risk, and invests quite differently from its benchmark and peers. Performance should therefore be expected to be different and volatile at times.


Alexander Darwall has a long history of managing European investment portfolios, making him one of the investment industry's best-known European investors. He started his investing career in 1987 as an equity analyst and joined Jupiter Asset Management in 1995 as a fund manager in the European Equities Team. He managed the Jupiter European Opportunities Trust from launch in November 2000, and also ran the open-ended Jupiter European Fund from 2001 until he left the group in 2019.

Last year Darwall set up his own investment management company, Devon Equity Management. In October 2019, Devon became the investment adviser for this trust, previously named Jupiter European Opportunities Trust, allowing Darwall to continue to manage the trust using the same investment process that's been in place since launch.

Darwall has the support of assistant fund manager Luca Emo on this trust. Emo was previously at Jupiter as a European equities analyst, and has worked closely with Darwall for a number of years. Charlie Southern was also recently appointed as a Senior Analyst in the team. While the management team behind the trust is relatively small, Darwall has worked in this manner for many years and the experience of the wider team is an advantage.


Darwall is a high-conviction investor and has adhered to the same investment process throughout his investing career. He focuses on a small number of what he believes to be the best opportunities across the European market, and we view him as a true stock picker. This means he only looks at the prospects and potential drivers of success of individual companies, rather than the broader economic and political backdrop.

The manager looks for something unique in the companies he invests in. They should offer a product or service that other companies find hard to replicate or do better, and this could provide a sustainable advantage. A company might achieve this by having access to unique information, having a strong brand that customers remain loyal to, or owning a large share of the market, for example. This means consumer demand could hold up, or get stronger, even if there are problems in the wider economy.

Darwall also looks at the structure of industries and the challenges and opportunities each one faces. Companies under consideration should also be run by a management team with a strong track record of making good investment decisions, which are made with long-term shareholders in mind.

The impact of the coronavirus has led the manager to make some changes to the trust this year. Amadeus, a travel technology business, has been sold as its profitability depends on high volumes of air travellers, which have reduced significantly this year. Similarly, cruise operator Carnival has been sold, as has CGG, a French company providing geological, geophysical and reservoir capabilities.

On the other hand, an investment in GTT, an engineering and energy-related company, has been added to the trust. It designs containment systems for the shipping and storage of liquefied natural gas (LNG), and the manager expects the business to do well from expected growth in demand for LNG worldwide. ASML, a Dutch-listed company that makes equipment for the semiconductor industry, is another new investment.

Please note the manager has the flexibility to use gearing (borrowing to invest) and invest in smaller companies, both of which adds risk.


As a founder of Devon Equity Management, and a significant investor in European Opportunities Trust, we think Darwall is well-incentivised to deliver good returns for investors. He is also Chief Investment Officer, which is in-keeping with existing investment responsibilities and shouldn't add too much to his workload, given his focus on a single investment strategy.

Devon currently only focuses on and specialises in European equities and, as a boutique investment house, the managers can maintain flexibility and control over their investment approach.

The running of the business is left in the hands of other experienced colleagues. This includes Chief Executive Officer Richard Pavry, Jupiter's former head of investment trusts. FundRock also acts as the trust's Alternative Investment Manager, providing additional risk oversight.

ESG (Environmental, Social and Governance) issues are integrated into the investment process. Darwall aims to invest in companies for a prolonged period of time, so he believes it's critical to consider the sustainability of growth of any investment. Factors such as corporate culture and the integrity of management are considered.


Under the new management arrangements at Devon, effective from 1 June 2020, Devon and FundRock are paid aggregate management fees of 0.90% per annum of net assets up to £1bn and 0.80% per annum on any net assets over this amount. A performance fee is no longer payable at Devon.

The latest reported ongoing charge, which includes management fees and other administrative expenses, is 0.99%. The trust is currently £860m in size based on net assets.

Investors should refer to the latest annual reports and accounts and Key Investor Information for details of the risks and charging structure. If held in a SIPP or ISA the HL platform fee of 0.45% (capped at £200 for a SIPP and £45 for an ISA) per annum also applies. Our platform fee doesn’t apply if held in a Fund and Share account.


Over the past year the trust's net asset value (NAV) fell 11.0%, while its share price fell 19.0% as the discount widened over this time. The FTSE World Europe Index lost 4.5%* over the same year, though remember past performance isn’t a guide to future returns.

The trust has had a particularly tough time in 2020. Like most trusts and funds investing in global equities, European Opportunities Trust was hurt by the coronavirus-induced volatility in February and March. While it subsequently made some recovery, since the end of May its share price has fallen 11.3%, while the FTSE World Europe Index has grown 4.0%. This is mainly because of the collapse of Wirecard's share price in June, in which European Opportunities Trust had a significant investment. The share price was impacted by the disclosure of a suspected fraud at Wirecard when its auditors, Ernst & Young, declined to sign off on its year end accounts in June 2020. The entire holding was sold by Darwall on 18 June soon after the news was made public.

The manager has made a profit over the longer term since first investing in the stock 13 years ago. That said, it's still disappointing to see weak performance from a such a large position in a single stock, one which the manager continued to support over many years.

Other weak performers this year include Carnival which, as mentioned above, has recently been sold. Shares in adidas also fell amid the coronavirus-related turmoil, and again Darwall sold this stock due to concerns over reduced consumer spending.

On the other hand, companies in the healthcare and digital sectors contributed positively to performance. This includes healthcare companies BioMerieux and Novo Nordisk, and consumer credit reporting company Experian.

Over the longer term, Darwall has delivered strong returns for investors*. He has shown astute stock-picking ability in the past, and we believe he has the ability to drive good returns in future. There are no guarantees though and markets could remain volatile in the near term as companies continue to wrestle with uncertainty caused by coronavirus.

Darwall recognises businesses face plenty of risk in the short term, not least because the coronavirus is increasing costs for businesses and putting pressure on consumers, while debt levels are also high. He aims to lessen these risks by continuing to focus on companies that could benefit from longer-term growth trends, such as increasing demand for products and services from digital-related companies, and those that carry out business globally, rather than only relying on demand from the European domestic economy.

Annual percentage growth 30/09/2015 - 30/09/2016 30/09/2016 - 30/09/2017 30/09/2017 - 30/09/2018 30/09/2018 - 30/09/2019 30/09/2019 - 30/09/2020
European Opportunities Trust PLC 8.8% 20.2% 27.7% -1.9% -19.0%
FTSE World Europe 20.3% 19.2% 3.1% 5.5% -4.5%

Past performance isn't a guide to the future. Source: *Lipper IM to 30/09/2020.

Find out more about the European Opportunities trust including charges

European Opportunities Trust Key Investor Information

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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