Invests in Europe’s Global Champions: European Opportunities Trust

EOT invests in Europe’s global champions…by Alan Ray

Overview

 
European Opportunities Trust (EOT) is a pan-European equity trust with a concentrated portfolio of just under 30 stocks. The manager seeks to invest in companies with enduring qualities with high barriers to entry. Over the long term the portfolio has favoured investments in the healthcare, industrials and technology sectors. EOT’s pan-European approach differentiates it within the peer group, as does its all-cap portfolio, with currently about 16% of the portfolio in mid- and small-caps.

In June 2025 EOT’s manager, Devon Equity Management, announced it is to be acquired by River Global, a listed fund management business with c. £2.1bn under management. The Devon team will move to River and Alexander Darwall, who has managed EOT since inception in 2000, and Luca Emo will have senior roles at the new firm and continue to co-manage the trust.

EOT’s NAV and share price total return over the last five years is c. 31% and 35% respectively. The benchmark MSCI Europe Index has produced a total return of c. 61% over that period while the Morningstar Europe peer group’s NAV total return of c. 42% highlights that this has been a difficult period for some active managers. EOT has lagged the benchmark recently due to several factors including a low weight in banks, which have performed strongly, and underperformance by long-standing holdings such as pharmaceutical giant Novo Nordisk, which EOT has invested in for over two decades.

EOT’s discount of c. 9% has narrowed over the last year as investor sentiment to Europe has improved and the trust’s board has conducted a series of buybacks and tender offers, returning over £450m to shareholders over 2024 and 2025 year to date. EOT has a further 25% conditional tender offer in 2026, discussed in the Discount section.

EOT is currently geared c. 11%, in line with its long-term average. The trust primarily targets capital growth and pays a small annual dividend, currently yielding c. 0.2%.

Analyst’s View

The acquisition of Devon Equity Management should be a positive for the team managing EOT, as it will give them access to more resources and a broader perspective from River Global’s existing equity teams, while the team are taking on senior roles, which ensure that EOT should see continuity. They believe that the medium-term outlook for Europe and its ‘global champions’ hasn’t been so bright for some time, with the stimulus of Germany’s infrastructure spending programme and European-wide increases in defence spending both expected to provide tailwinds for some of EOT’s companies.

EOT’s performance is clearly disappointing against a backdrop of improved sentiment and performance for European equities. Highly concentrated portfolios can and do diverge from the index from time to time, and in fairness to EOT, the same investment manager and process has delivered positive divergence from the index over many years. EOT’s board has been very clear in its actions, returning over £450m to shareholders from the start of 2024, including two large tender offers at close to NAV. Further, it has implemented a conditional tender offer in 2026 linked to EOT’s performance against the benchmark, which will provide a further option for shareholders should performance continue to lag. Shareholders will also vote on the continuation of EOT at the 2026 AGM. The first steps to a recovery in performance have therefore been taken, and the current positive outlook for European equities could be the last piece in the puzzle for EOT to return to form.

Bull

• A focused portfolio of some of Europe’s leading global businesses
• Little or no exposure to businesses directly impacted by tariffs
• Differentiated from peer group by pan-European and all-cap mandate

Bear

• Some investors may prefer separate UK and European mandates
• Performance of concentrated portfolios may significantly diverge from the index
• Gearing can amplify losses as well as gains

See the full research on European Opportunities (JEO) here >

_{Disclosure – Non-Independent Marketing Communication. This is a non-independent marketing communication commissioned by European Opportunities. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research}