Investors are bizarrely negative on Europe

01/07/2019

Download


Ollie Beckett, fund manager of TR European Growth Trust, explains the rationale behind some of the new names in the portfolio and his process for identifying companies with good growth prospects. Ollie also discusses the “bizarrely negative” attitude towards Europe, where many companies have benefited from the Brexit saga.

 

Transcript

Q: Hello and welcome to this latest video update for the TR European Growth Trust. I'm delighted to be joined by the fund manager Ollie Beckett. Ollie thank you very much for joining me today.

Now first off it looks like you've been increasing the number of stocks within the portfolio. You've come up from about 135 at the end of January to more than 140 as we speak today. So what can you tell us about some of those new names and why are they in the portfolio?

A: We're not going to add any more names to the portfolio, that should probably be the first thing to say, but recently we have added a couple of IPOs. One is Medacta, which is in orthopaedics, bringing new techniques and new technologies to the orthopaedic area; and also Karnov, a Scandinavian company which is providing information for the legal profession.

We've also ramped up our position in a Spanish company called Almirall, which does drugs for dermatology, so treatment of things like psoriasis, which is a big growth market. And I think another name we added was AEDUS, which is a Spanish house builder. So we've added a few names, fairly defensive names to be honest but with interesting growth profiles.

Q: There are some interesting names in there and some that we definitely won't have heard of before, so what's your process for identifying companies with good growth prospects? Are you going by some long term trends that help your decision making, how does it work?

A: I don't think we've got any great sort of rocket science up our sleeve. A lot of the sort of growth trends all of us will see every day in our life, so you'll see it. What we've got to be careful of is not getting lured into investment banking hype or overpaying for things. I mean at the moment I'd say a lot of people are overpaying for thematic investing – “Hey this is a really cool growth theme,” and overpaying. So there are a number of growth themes out there, whether it's in environment, whether it's in gaming, it's a question of paying the right price for these stocks.

Q: Okay, Europe doesn't get a lot of positive coverage and it's not particularly popular with investors but there must be some exciting things happening on the continent that investors would be interested in. So what can you tell us about Europe and perhaps some of the more interesting and exciting stuff that's going on there?

A: Okay first and foremost I'd say people have almost become bizarrely negative about Europe. There are some decent companies out there across the whole continent. Maybe things to point to would be the gaming sector in Sweden, which is now the sort of centre of gaming in Europe. Other areas, if you look at Amsterdam it's a city doing very well actually partly because of Brexit it's come out of it very strongly. Also, there are companies in Europe which have exposure to the UK which look really cheap; DFDS a cross-channel ferry, NOBIA the kitchen manufacturer which owns the magnet brand and supplies Travis Perkins, i.e. Wicks. There are a lot of very good companies. So people are far too quick to dismiss continental Europe.

These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

The information in this article does not qualify as an investment recommendation.

For promotional purposes.


Important information

Please read the following important information regarding funds related to this article.

TR European Growth Trust PLC

Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser.

Past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Issued in the UK by Janus Henderson Investors. Janus Henderson Investors is the name under which investment products and services are provided by Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Henderson Management S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier). We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Specific risks

  • Active management techniques that have worked well in normal market conditions could prove ineffective or detrimental at other times.
  • This trust is suitable to be used as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this trust.
  • The trust could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the trust.
  • If a trust's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio diversified across more countries.
  • Derivatives use exposes the trust to risks different from, and potentially greater than, the risks associated with investing directly in securities and may therefore result in additional loss, which could be significantly greater than the cost of the derivative.
  • The return on your investment is directly related to the prevailing market price of the trust’s shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the trust. As a result losses (or gains) may be higher or lower than those of the trust’s assets.
  • Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
  • Where the trust invests in assets which are denominated in currencies other than the base currency then currency exchange rate movements may cause the value of investments to fall as well as rise.
  • The trust may use gearing as part of its investment strategy. If the trust utilises its ability to gear, the profits and losses incured by the trust can be greater than those of a trust that does not use gearing.
  • If the trust seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
  • Most of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell and their share price may fluctuate more than that of larger companies.

Risk rating

Share

Important message