The best and worst: Confidence in Europe rebounds - European investment trusts

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Devaluation of sterling has made the performance of all 14 European investment trusts look generally healthy in recent months.

Most fund managers sound more confident about 1993 than they were about the last two rather difficult years. The expectation of falling interest rates on the Continent is the basis for this.

The manager of Gartmore European, the leading trust so far this year, believes that the relatively highly geared Spanish market - in which it has invested 8 per cent of its funds - stands to benefit particularly from any interest rate reductions.

Gartmore is not heavily invested in the German economy, but it does have substantial investment in Swiss-based and Netherlands- based multinationals, which it believes are strong enough to withstand any little local economic difficulties.

While Gartmore focuses on the larger European companies, Fidelity has turned to smaller and medium-sized companies.

'The stocks will often be rather contrary to the fashion,' said portfolio strategist Chrissy Keen. 'But you can find a lot more growth from smaller and medium-sized companies. The next couple of months may be more difficult, but I think the fund is positioned well.'

Fidelity has invested 19 per cent of its funds in Scandinavian companies.

'It was the first area of Europe to go into recession and we think it will be the first to come out,' she said.

At the bottom end of the table is European Assets. Investors may have been wary of the trust for three reasons: its European focus; its concentration on smaller companies, and its Dutch registration.

------------------------------------------------------------------------ Best and worst: European investment trusts ------------------------------------------------------------------------ The best pounds 1 Gartmore European 112.88 2 Fidelity European Value 110.56 3 Abtrust New European 110.17 4 TR European Growth 108.97 5 F&C Eurotrust 107.23 The worst 10 Fleming Continental European 104.37 11 Thornton Pan-European 103.70 12 ECU Trust 103.45 13 Murray European 102.56 14 European Assets 102.42 ------------------------------------------------------------------------ Return on pounds 100 over one month, on a mid price basis, income reinvested Source: Micropal ------------------------------------------------------------------------