Continental fund manager keeps tight control
European ‘gems’ waiting to be found
Published:
The SVM Continental European Fund was launched in March 2000 as an offshore fund and brought onshore in September 2002.
It seeks to outperform the FTSE World Europe ex-UK index by investing in a tightly controlled list of 35-45 continental stocks.
Manager Hugh Cuthbert employs a bottom-up, stock-picking approach unconstrained by country or sector weightings.
Commenting on the fund’s prospects for the remainder of 2008 and beyond, he said: “There are still undiscovered gems out there.”
The manager makes at least two trips a month to visit the boards of European companies and takes time to get to know the fundamentals of each market before he feels in a position to judge whether or not the company has good prospects for out-performance.
Mr Cuthbert said: “While on a visit to Germany, I met the management of a company which is covered by only one analyst. In the UK, this company would rank alongside Bradford and Bingley in size, which has 22 analysts covering it.
“The management of the company said they had never met a potential international investor.”
One of the holdings in the fund is National Bank of Greece, which is coping better than some UK banks during the credit squeeze, because it is awash with depositor savings and is managing to lend some of this out at very attractive rates in the credit markets.
The fund invests across the capitalisation range without constraint and has 70% invested in large-cap companies.
It was positioned relatively defensively in readiness for an economic downturn and therefore Mr Cuthbert does not feel the need to make specific changes for the current climate.
Each stock in the portfolio has a target price and, once this has been reached, it will be sold to lock in profits.
Currently, the fund has about 25% of its holdings by value in France, with the next biggest holdings being Germany and Switzerland.
At just under £30million, it is nimble enough in size to allow the manager to act quickly and dispassionately about stock purchases and sales.
This fund could be a suitable investment for anyone seeking broad exposure to the long-term growth potential available within the mainland European economies.
Barry O’Neill is a chartered financial planner with Thomson Shepherd and can be contacted on 01224 619215
