Fund in focus - Funds - The Share Centre

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Fund in focus

Each week, our analysts put the spotlight on a fund from our Platinum 120 range of quality funds, which they believe has strong management and performance prospects for the medium/long term (generally 3+ years). Each fund is given a risk rating and is classified by IMA Sector to give you a broad idea of its objectives or underlying assets. This week's Fund in focus is...

Man GLG Continental European Growth Prof C Fund Acc


  Fund IMA Sector Current
price (pence)
Our risk rating Add to watchlist?
 Man GLG Cont European Gwth Prof IA Europe Excluding UK 493.5000  M6 Watch
Recommended at p on 21 April 2017

Find out more about this fund.

Our view

Europe

While company balance sheets in the Eurozone remain strong, policy reform action remains painfully slow and the reforms that are coming through have been met with strong resistance. In addition, political headlines from Europe over Brexit will come more to the fore, as we progress through 2017, as will rhetoric over elections in key economies, which could potentially upset the status quo.

On the flip side of potential political woes, the European Central Bank's bazooka announced last March seems to be having a positive effect on stimulating growth on the bloc. However, Mario Draghi gave a strong indication recently that the European Central Bank is unlikely to raise rates in 2017, which is not great news for margins at European banks.



Fund positioning

The fund currently has its biggest sectorial active positions in consumer durables, transportation and retailing.. The manager is underweight banks, insurance and food & beverages. The geographic breakdown sees the fund's biggest positions in Ireland, Denmark, Sweden and France.

The funds top 10 ideas make up over 50% of the portfolio.



About the fund

The fund manager Rory Powe looks for strong European growth companies that fall in to two camps, which he refers to as, established leaders and emerging winners. He defines established leaders, as having a clear road map for earnings and free cash flow that includes a 3 to 5 year expansion path. He defines emerging winners as, companies in the vanguard of new or existing markets that have clear competitive advantages already. The maximum he will invest in emerging winners is 33% of the fund.

Rory Powe takes a bottom up approach to selecting companies for his fund, which means he is looking for business that have recurring revenues underpinned by pricing power, high gross margins, robust cashflow, a strong balance sheet and cash returns.

The portfolio will tend to be an eclectic, concentrated composition of high conviction names. The team is determined to invest in strong growth franchises through a focused research approach. While many fundamental investors will place emphasis on management teams, the team prioritises company strength and growth dynamics.



Observations

The fund is suitable for those investors looking to invest in a fund that offers a core portfolio of European equities, excluding the UK.

Due to the nature of the region and the development of their financial markets we rate this as a medium risk investment for those investors who want broad European region exposure in a well-diversified portfolio.



Comment last reviewed April 2017

Author: Sheridan Admans, Investment Research Manager

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