Following a strategic review, the struggling European Opportunities Trust (LON:EOT) is to wind itself up and offer shareholders three options.
They can either roll their investment into a new open-ended Liontrust fund, LT European Opportunities. This fund will bemanaged by Alexander Darwall. EOT’s current manager Devon Equity Management is in the process of being acquired by Liontrust.
Those who wish to stay in an investment trust can switch into JPMorgan European Growth & Income (LON:JEGI). The £620 million cap trust is the best performer in the AIC Europe sector over one, five and ten years.
Shareholders who prefer to take the money will be offered a full cash exit at a 2% discount to net asset value (NAV).
Menu of options
EOT chairman Matthew Dobbs explained: ‘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.’
Wirecard woe
Formerly Jupiter European Opportunities, EOT followed Darwall after the manager left Jupiter Asset Management to found Devon in 2019.
Sadly, the trust’s reputation never really recovered from the 2020 implosion of Wirecard. The German payments company had been Darwall’s top holding.
EOT was also facing a third 25% tender offer in three years following its prolonged period of underperformance.
JEGI is flying high
In contrast, JEGI’s performance has been outstanding. As a result, the trust has traded around NAV throughout 2026. JEGI is managed by Alexander Fitzalan Howard, Zenah Shuhaiber and Tim Lewis. The fund seeks to deliver capital growth from a diversified portfolio of European stocks.
JEGI boasts the best NAV total return performance in the AIC Europe sub-sector over the one, three and five years to 27 May 2026. It has returned 23%, 57% and 83% over those periods respectively. That compares with the 19%, 44% and 56% returns delivered by the MSCI Europe ex UK benchmark over the same timeframes.
JEGI has a track record of outperforming over different market cycles. And at 0.64%, its ongoing charges ratio is the lowest in the sub-sector.
Sentiment towards the one-time top-performer EOT soured following Wirecard’s collapse. And the damage to Darwall’s reputation was considerable.
In October 2023, EOT became the target of the first public campaign by Saba Capital. The US activist unsuccessfully pushed for a 25% tender vote to be doubled and voted against continuation.
The trust also held an over-subscribed 25% tender last year. And EOT was facing its third 25% tender offer in three years following a prolonged period of underperformance.
Positive outcome
Given this background, we think this is a positive outcome for EOT’s shareholders. These three distinct options cater to a broad range of preferences.
Those who still have faith in Darwall’s stock picking abilities can follow him to Liontrust. And those who want to retain European exposure via the investment trust structure can roll into JEGI.
Sharesify notes that post-transaction, JEGI would be one of the largest investment trusts in the AIC Europe sector with greater liquidity and scale, which should result in even lower costs. By dint of its size, the trust should also garner greater attention from wealth managers and appeal to even more retail investors.
Read the press release here: https://www.londonstockexchange.com/news-article/EOT/result-of-strategic-review/17613386
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