As Hugh Cuthbert, manager of the SVM Continental Europe Fund admits, times aren’t easy for European fund managers. “Money is flowing towards the all-too-obvious emerging Far Eastern and South American markets.” But he’s convinced that in their rush to the “most obvious place”, investors are missing the contrarian European story, “which may prove to be the most profitable trade” now.
He may be on to something, says Trustnet. “Over a fairly lengthy track record period by period, [he has] consistently managed to outperform the peer group.” In the last 12 months his fund delivered 16.9% growth, outperforming the FTSE Europe ex UK index by 2.1%. Its record over five years is even better – a 33.9% gain, compared to 23% for the index.
Cuthbert feels that with the €750bn rescue package the “EU has already gone a long way” to proving it’s not “too cumbersome to respond to a crisis”. The “ballooning cost of debt” of some of the smaller nations has been accompanied by “a dramatic decrease in the cost of funding for more important economies”. So “the largest part of the European economy enjoys low interest rates and a devalued currency”.
Cuthbert thinks European companies can offer a good way into emerging-market growth. There are a “host of firms in Europe whose exposure to emerging markets outweighs those domiciled in those regions”. Add in a falling cost base, historically cheap funding, plus rock bottom valuations, and “Europe stands to be a profitable place for those that dare”.
The fund has an initial charge of 5.25% (refundable via a funds supermarket) and an annual charge of 1.50%.
Contact: 0845-066 1110.
SVM Continental Europe Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| DNB Nor ASA | 4.3 |
| Daimler AG | 3.9 |
| Bertrandt AG | 3.8 |
| Austria Microsystems AG | 3.8 |
| Tag Tegernsee Immo AG | 3.5 |
| K&S AG | 3.4 |
| Skandinaviska Enskilda Banken | 3.1 |
| PPR SA | 3.0 |
| Deutsche Postbank AG | 3.0 |
| Novo-Nordisk AS | 2.9 |