Investment trust JPMorgan European Discovery (LON:JEDT) built on its formidable long-term performance record with outstanding FY26 results. The £600 million cap fund generated an impressive net asset value (NAV) total return of 23.2% for the year to March 2026.
That performance beat the 17.5% return from the MSCI Europe (ex UK) Small Cap Index. It also means ‘JEDT’ has outperformed the benchmark over the past three, five and 10 years.
And there could be more stellar returns to come. Why? Well managers Jon Ingram, Jack Featherby and Jules Bloch remain ‘highly optimistic’ about the prospects for European small caps. They argue the asset class is ‘overdue a resurgence as Europe enters a new phase of investment and growth’.
Benchmark beater
JEDT aims to provide capital growth by uncovering hidden gems across Continental Europe. Over the decade to March 2026, JEDT has delivered NAV and share price returns of 139.6% and 149.9% respectively, ahead of the benchmark’s 138.7%.
For more on the trust’s secret sauce, watch Sharesify’s Podcast special featuring Jack Featherby via the link below.
In today’s results statement, the managers insisted: ‘Smaller cap companies are uniquely positioned to benefit from the major investment themes playing out in European markets, as a result of their strong domestic focus and agility in adapting to changing market conditions.’
Compelling entry point
They stressed European small cap valuations remain ‘highly attractive relative to their larger peers, offering compelling entry points for investors seeking both growth and value’.
Their view is this valuation gap, combined with increasing interest from private equity and strategic investors, is ‘likely to increase deal activity and result in additional market upside’.
The European smaller companies sector is experiencing an overdue resurgence from increased fiscal investment across Europe, particularly in Germany, together with expectations of higher infrastructure and defence spending.
Top contributors
Top stock contributors included Dutch construction firm Koninklijke Heijmans (AMS:HEIJM). The company profited from increased infrastructure spending and fiscal stimulus as well as robust demand for housing in its home market.
Other winners Tecnicas Reunidas (BME:TRE), a Spanish engineering contractor capitalising on increased investment in the power sector. And Kitron (FRA:KP5), a Scandinavian electronics manufacturer seeing strong demand from defence and data centre customers.
At the sector level, overweight positioning in the industrials, financials and energy sectors were the key drivers of outperformance. Increased fiscal stimulus and public infrastructure spending proved a boon to German engineering and construction company Bilfinger (ETR:GBF).
Nordic life insurer and asset manager Storebrand (FRA:SKT) reported robust growth in its non-life and health insurance businesses. Another winner was Italy’s Saipem (BIT:SPM), a leader in engineering services for the energy sector.
JPMorgan European Discovery Trust offers investors a great way to tap into a long overdue rebound in European small caps.
It may surprise many investors that the MSCI Europe ex UK Small Cap Index has outperformed the US S&P 500 over the long term. Despite the vaunted growth of US tech companies, the European small cap sector is home to many ‘hidden gems’.
Investing in small cap companies is riskier than putting money to work with mid and large caps. But we like JEDT’s emphasis on high-quality companies with resilient business models as well as attractive long-term growth prospects.
Though it has narrowed considerably in recent years, an 8% share price discount to NAV demonstrates there is still value on offer here. Maximising capital growth is JEDT’s main focus. But the trust also has an income angle, having treated investors to an uplift in the total dividend from 13p to 16p.
Read the press release here: https://www.londonstockexchange.com/news-article/JEDT/final-results/17647326
