Credit Lyonnais is favouring European investment trusts as it sees short term market fears creating ...
Credit Lyonnais is favouring European investment trusts as it sees short term market fears creating pricing anomalies.
Peter Walls, investment trust analyst at Credit Lyonnais, said: "Short term concerns over inflation, German objections to Vodafone taking over Mannesmann, and the sharp spike in the oil price are all stalling Europe's advance and creating buying opportunities. On a long term view European companies look set to continue to perform strongly in both relative and absolute terms. European investment trust managers have excellent track records in this field over short, medium and long terms."
Among the trusts Walls recommended are the £411.1m Charter European trust which is trading on a discount to NAV of 5.6% followed by Foreign & Colonial Eurotrust. For small company exposure within the region he favours Fleming European Fledgling and INVESCO Continental Smaller Companies.
Credit Lyonnais also maintained its recommendation to buy Govett Asian Recovery. Walls said: "Although, since we first recommended Govett Asian Recovery at the beginning of November, the share price has risen by 15% and the discount has narrowed to 17%. NAV performance remains strong and the trust continues to offer good value."
Christian Dangerfield, manager of the trust and head of Asian investments at AIB Govett, recently relocating to the Far East. The £68.8m trust was launched last November. Walls said a safer option for those who did not want full equity exposure is Cairngorm Building Society units.
He said: "Principally invested in a range of PIBS issued by various mutual societies - although a quarter of the portfolio is equity based - the shares are currently yielding 5.7%, and offer the potential for equity kickers should the investee companies choose to demutualise. Shares in the Building Societies units currently stand at 35% discount to NAV."
Despite improved risk appetite
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