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Investment Trust

Jupiter European Opportunities Trust

Elite Rated by FundCalibre

This trust offers investors access to a high conviction portfolio of European equities with a bias towards medium and larger companies. The manager, who also runs the Elite Rated Jupiter European fund, has developed a consistent investment process that has a record of success in different economic environments.

Investment Manager

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Jupiter Asset Management is the investment company employed to manage this trust. Founded in 1985, Jupiter Asset Management has grown from a specialist investment boutique to a global fund management company. It provides a range of products from bond and equity funds to multi-asset strategies for both retail and institutional clients.

The trust manager is Alexander Darwall, who has more than 25 years of industry experience. He started his career as an equity analyst and worked at a number of firms prior to joining Jupiter in 1995, including Goldman Sachs. Alexander manages several other European funds.

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Investing is not rocket-science and my approach is simple. I want world-class companies that can grow irrespective of politics and market noise – companies that are in control of their own destiny.

Alexander Darwall - Trust Manager

Investment Trust Board

Hugh Michael Priestley is chairperson of the five-member board. Hugh serves on numerous investment trust boards and is also deputy chairperson of the Association of Investment Companies. The other board members are Philip Edward Fraser Best, Andrew Lang Sutch, John David Arnold Wallinger and the Rt Hon Lord Lamont of Lerwick. Together, they have vast experience across economics, financial services and regulation, which is put to good use in protecting the interests of shareholders. The company year end is 31 May.

The Investment Process

The Jupiter European fund and the Jupiter European Opportunities Trust have a very high overlap of stocks and a similar investment process. Alexander generates his own ideas, primarily through company meetings. He looks for evidence of successful, proven business models being implemented by open and honest management teams. Firms benefiting from economic tailwinds and in strong positions within their industries are preferred. He particularly likes businesses with proprietary technology and companies that have a business plan that provides them with long-term sustainable growth.

Risk

The manager employs an unconstrained approach to stock selection, which means the fund can deviate from the benchmark and this can introduce more risk into the portfolio. Investors should also be aware of the currency risk. Unlike the Jupiter European fund, the Jupiter European Opportunities Trust uses gearing, which can be another source of risk. While the Jupiter European fund has historically been less volatile than the market, the trust has tended to be more, although its returns have also been higher over the long term.

Gearing

The company can gear up to 45% of the net asset value (NAV). The board oversee the level of gearing in the company and reviews the position regularly. Under normal circumstances, the board do not expect the gearing to exceed 30%. In the past, the company has tended to increase gearing in times of low valuations and reducing gearing in strong markets. This approach has served the company well over the course of its history.

Share price discount/premium

The share price has historically traded in a wide range compared to the trust’s NAV. In the last ten years (31 May 2016), it has reached a 21.7% discount and a 3.9% premium relative to the NAV. The board monitor the position and would issue shares if necessary to minimise the premium; however, they do not have a discount control policy in place.

Our Opinion

Alexander has developed a real aptitude for recognising patterns of success in company business plans and management teams. This skill, combined with his patient and value-aware approach, has provided shareholders with excellent returns on a medium to long-term basis. His past performance, which has been established over more than 15 years, proves that his process is repeatable and we see no reason he would not be able to continue this success going forward.

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