Baillie Gifford European Growth NAV rises, lags benchmark

(Sharecast News) - Baillie Gifford European Growth Trust reported a modest rise in net asset value for the year ended 30 September on Tuesday, although its performance lagged its benchmark despite a stronger second half. The London-listed trust delivered a net asset value total return of 5.5%, compared with a 15.5% return from its comparative index.

However, the share price total return was significantly stronger at 14.5%, supported by a narrowing discount and buybacks.

In the second half of the financial year, both NAV and share price returns outpaced the benchmark by one percentage point and 1.4 percentage points, respectively.

The trust also increased its exposure to private companies, holding six unlisted investments representing 15.5% of net assets at the period end, compared with 6.4% in five companies a year earlier.

BGEU said the unlisted holdings made a strong contribution to performance.

The discount to NAV tightened to 8.6% from 15.7% over the year, aided by the repurchase of 27.1 million shares for around £26.9m, equivalent to 7.7% of the trust's share capital at the start of the period.

Chairman David Barron said the board was confident in the trust's strategy, noting that "good outcomes can be achieved by using the advantages of the investment trust structure - gearing, a meaningful exposure to unlisted companies and a willingness to diverge from the benchmark."

"Many of the companies we own are delivering good operating performance and excellent results, growing at attractive rates," he added.

"This gives us confidence that early signs of improvement in performance can be continued into next year."

At 0851 GMT, shares in Baillie Gifford European Growth Trust were down 0.28% at 106.2p.

Reporting by Josh White for Sharecast.com.