The Analyst: In Europe you must find the right manager to drive funds

 

It is rare for the longevity of a fund manager to present a limitation to investors’ returns. Take Tim Stevenson, the manager of Henderson EuroTrust plc, who has been at the helm of the fund for more than 20 years. Under his stewardship, investors will have found little reason to complain as Mr Stevenson boasts an impressive long-term performance record. Indeed, under his tenure, the investment trust has returned a remarkable 1,400 per cent since its launch in 1992.

Over such prolonged periods, fund managers will inevitably face a variety of challenges. For many, the current battle is Europe whose problems are rarely out of the headlines. As I write, attention has turned to Cyprus as unassuming deposit holders risk losing a percentage of their savings in order to bail out the country and remedy the mistakes of politicians and bankers.

Worryingly, if such a precedent is set, a similar call to action could spread to other southern Mediterranean countries. It is hardly a deal for putting some faith back into the banking system.

Prior to the Cypriots creating headlines, the Italian election came to the fore, triggering another setback. According to Mr Stevenson, there needs to be a change in tack from Germany in terms of its demands. In the meantime, while further setbacks arise, he will not be cutting the fund’s level of gearing as he expects such setbacks to be relatively short term. In other words, he is in “buy-into-weakness” mode.

While private investors have tended to shun Europe, the trust now stands at a 8 per cent discount to net asset value. In some respects, it comes as a surprise this spread is not wider given the extent of the Europe’s problems. Though, as I point out – not for the first time – the European economy and its stock market are not one and the same. For one thing, European companies have proved particularly successful in acting as a gateway to the world. Famous names such as BMW have a global footprint, and their overseas operations dwarf their domestic business. Many of these companies are still expanding outside their domestic markets and European companies are among the principal beneficiaries of growing wealth in emerging markets.

From an economic viewpoint, we should expect low growth for years to come. Mr Stevenson’s aim “is to invest in companies that are part of the solution” and he seeks companies with real potential for growth. At present, his largest holding is in Deutsche Post, the courier firm, which continues to benefit from the growth of internet shopping in addition to increasing exposure to Asian consumers.

It is also an example of how a company’s domicile is relatively immaterial in comparison to revenues generated outside Europe. This is something many private investors miss completely. The trust also has holdings in financial companies such as Zurich Life and UBS, where Mr Stevenson has noticed a significant increase in private savings.

Software company, SAP, has also boosted performance. Only a few years ago, it was trading at a discount to arch-rival Oracle, but now trades at a significant premium to it.

Having recently met Mr Stevenson, he was keen to point out the strong, well-resourced European team based at Henderson. The team includes a number of well-known names in the industry such as Richard Pease and John Bennett. While the trust is very much his own fund, with the freedom to invest as he wishes, having such analytical input is a fantastic resource.

Henderson EuroTrust plc is a mid-cap orientated portfolio of top-quality companies, concentrated with only 55 holdings. With an emphasis on quality, increased investor risk appetite could leave the fund lagging its peers, which it has done so over recent months. I would argue that quality always comes through in the end and, therefore, this is the type of fund investors should be looking to buy and hold for the long term.

In my view, the trust’s only downfall is its performance fee. However, it is noticeable the boards of many investment trusts are reconsidering their fee structure as more competition breaks out. I would prefer a more conventional annual management charge which aligns the fund manager and the investor alike. Nevertheless, in my opinion, this is a quality offering ran by an experienced fund manager with the backing of a superb team.

Mark Dampier is head of research at Hargreaves Lansdown, the asset manager, financial advisor and stockbroker. For more details about the funds included in this column, visit www.hl.co.uk/independent

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Extras
indybest
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Junior Quant Analyst - C++, Boost, Data Mining

    £25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

    Service Desk Analyst- (Desktop Support, Help desk)

    £25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

    Junior Quant Analyst (Machine Learning, SQL, Brokerage)

    £30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

    UNIX Application Support Analyst- Support, UNIX, London

    £45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

    Day In a Page

    Air strikes? Talk of God? Obama is following the jihadists’ script

    Air strikes? Talk of God? Obama is following the jihadists’ script

    The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
    Ebola outbreak: Billy Graham’s son declares righteous war on the virus

    Billy Graham’s son declares righteous war on Ebola

    A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
    Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

    Not even Jeremy Clarkson is bigger than the BBC, says TV boss

    Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
    Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

    Nick Clegg the movie

    Channel 4 to air Coalition drama showing Lib Dem leader's rise
    Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

    Philip Larkin: What will survive of him?

    Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

    Waxing lyrical

    Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
    Texas forensic astronomer finally pinpoints the exact birth of impressionism

    Revealed (to the minute)

    The precise time when impressionism was born
    From slow-roasted to sugar-cured: how to make the most of the British tomato season

    Make the most of British tomatoes

    The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
    10 best men's skincare products

    Face it: 10 best men's skincare products

    Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
    Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

    Mackay, Moody and another grim day for English football

    The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
    La Liga analysis: Will Barcelona's hopes go out of the window?

    Will Barcelona's hopes go out of the window?

    Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
    Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

    We know all too much about the cruelty of Isis – but all too little about who they are

    Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
    Neanderthals lived alongside humans for centuries, latest study shows

    Final resting place of our Neanderthal neighbours revealed

    Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
    Scottish independence: The new Scots who hold fate of the UK in their hands

    The new Scots who hold fate of the UK in their hands

    Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
    Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

    Blight club: Britain's ugliest buildings

    Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape