The trust’s NAV has beaten its benchmark over the past 12 months and made similar gains to its peers, yet it still remains on a wider discount than the alternatives in the sector.
A number of Asian income funds also look cheap compared with recent history, and even the top-performing Murray International trust, which has long been on a substantial premium, has slipped back to the lower end of its range on the back of its weighting to the unpopular Asian and emerging markets.
Lovett-Turner says that TR European Growth has been doing well off the back of a shift into companies serving recovering domestic demand.
"During the last three years, TR European Growth has been focused on companies that have global, rather than purely European exposure, to benefit from a faster recovery in the US and higher growth in Asia and emerging markets," he said.
"However, its manager Ollie Beckett believes this trend may be coming to an end and is increasingly focused on stocks with high domestic exposure, such as Indra Sistemas (a Spanish IT systems company) and GFK (a market research company based in Germany)."
"In addition, the manager is focused on companies restructuring their operations, such as Nobia, a kitchen manufacturer, and Oerlikon, a Swiss industrial that is concentrating on higher return core divisions."
Data from FE Analytics shows that TR European Growth has made 48.84 per cent over the past 12 months in share price terms as the HSBC Smaller Europe ex UK benchmark has made 34.49 per cent. In NAV terms the trust has made 39.1 per cent.
Performance of trust vs sector and index over 1yr
Source: FE Analytics
On a 12.1 per cent discount, it is currently cheaper than the three other European Smaller Companies trusts.
"We believe TR European Growth offers some value on a 12.1 per cent discount," Lovett-Turner said.
"Ollie Beckett has been lead manager since July 2011 and adopts a bottom-up stock picking style. He utilises a barbell approach, with the core of the portfolio focused on quality stocks with decent yields, while also seeking out opportunities in contrarian, deep value positions."
"The fund faces a continuation vote at its AGM on 11 November, but we expect shareholders to be supportive given the strong recent performance."
The premium on Murray International has come in to 7.7 per cent from a six-month high of 12.4 per cent.
The trust has made only 9.3 per cent in NAV terms and 5.9 per cent in share price terms, with the manager’s defensive style holding him back in a year in which markets rallied.
Tom Tuite-Dalton, analyst at Oriel Securities, says that although the fund may be out of favour at the moment, there are prospects for NAV performance to improve, pushing it back on to a higher rating.
"Relative NAV performance should improve should we see relative outperformance from Asia and emerging markets, a weaker sterling, and/or a correction in North America and/or Japan," he said.
"Long-term NAV total return remains ahead of the majority of the peer group, and by some margin."
Other trusts that look cheap compared with recent history are Asian-focused portfolios including the £404m Schroder Oriental Income, which is trading a fraction above par, having been on a 4.8 per cent premium.
The £336m Henderson Far East trust also looks cheap, having slipped on to a 1.1 per cent discount from a 4.2 per cent premium.
That both trusts are trading on a discount is a surprise given the high investor appetite for income funds in recent years, but the sell-off in Asia has clearly taken its toll.
However, the Schroders trust is currently yielding 4 per cent, according to the AIC, while the Henderson trust pays out 5.5 per cent.
Both trusts have also shown themselves to be capable of outperforming the Asia Pacific region, producing returns ahead of the MSCI Asia Pacific ex Japan benchmark over 3yrs.
Performance of trusts vs index over 3yrs
Source: FE Analytics
The £57m Edinburgh Dragon Trust, run by Aberdeen, is on a 9 per cent discount compared with a six-month high of 5.3 per cent, while JP Morgan Asian and JP Morgan Indian also look cheap.
The former is on a 12.2 per cent discount compared with a six-month high of 8.4 per cent, while the latter is trading at 15.2 per cent below par having been as high as 10.2 per cent.
Tuite Dalton notes that Vietnam Holding also looks cheap, despite strong NAV performance in the year-to-date.
The trust is on a 28.7 per cent discount, having been as high as 17.2 per cent in the past six months.
Data from Numis shows the trust has made 41.4 per cent in NAV terms over the past year while the share price has grown just 22.5 per cent.
Even in share price terms, the trust has substantially beaten the MSCI Vietnam index and its preferred MSCI Emerging Asia index over that time.
Performance of trust vs indices over 1yr
Source: FE Analytics
Tuite Dalton says that the generally expensive areas include UK smaller companies and Europe. This makes the TR European Growth Trust stand out even more.
"With Fidelity European Values now at its tightest discount in six months (8 per cent), those who took advantage and switched out of Fidelity’s open-ended fund when the listed fund traded on a 14 per cent discount or wider may be tempted to switch back to the open-ended fund if they wish to lock in the discount narrowing gain," he said.
"Small cap funds appear to have sustained their narrower discounts over the last month, reflecting exceptional long-term performance in the main. Again, where there is an open-ended equivalent, some may be tempted to switch."
"Qatar Investment fund has seen its discount narrow on the back of its forthcoming tender, regular buying back of its shares and a buoyant market."
