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Montanaro European Smaller Companies - Unfazed by market turmoil

Montanaro European Smaller Companies (MTE) has built up an enviable track record by backing high-quality growing companies for the long-term. In recent months, fears of interest rate increases (in response to rising inflation) have triggered a sharp reversal of sentiment towards ‘growth’ stocks. The war in Ukraine has made investors more risk averse, and some have sought safety in large cap stocks. MTE’s shares have moved from trading at a small premium relative to net asset value (NAV) to trading on a single-digit discount.
What we will not see in response to this situation is any change in the way in which MTE is managed. MTE has experienced many periods where low-quality stocks outperform or investors retreat to so-called defensive (usually low-growth) stocks. The manager may take advantage of the situation by adding to favoured stocks at attractive prices, but MTE will stick by its portfolio and wait for markets to come back to its way of thinking. The current discount may represent a buying opportunity.