Investing in Europe is no picnic right now, acknowledges Chris Rice in Investment Week. But if anyone can pull it off, the manager of the £837m Cazenove European Fund should be able to. His past experience managing money in Japan more than ten years ago has equipped Rice with the skills he needs to pick stocks in a debt-ridden environment, and he has shown an impressive ability to beat his peers over the past five years, with a 9% return compared to the sector average of 2.7%.
The euro is only “sustainable with proper fiscal and monetary union”, he tells Investment Week. Will that happen? He thinks that next year the European Central Bank may agree to support bond markets, in exchange for labour market and public sector reforms in Italy and Spain. But in the end, “even that will not be enough … in the next cycle Europe will either take a big leap forward or break up”. So why buy now? It’s “a value call”. If you have a “long time horizon” you can find “companies on low valuations and there are some pockets of real cheapness now”.
Rice doesn’t expect a recession on the scale of 2008/2009 in 2012, but there might be a “mini-recession” in the eurozone as austerity bites in France, Spain and Italy. “It has been a tough year for European economies but Chris Rice is focusing on companies delivering growth regardless of economic uncertainty, such as drinks company Campari,” says Mark Dampier of Hargreaves Lansdown. While sovereign debt fears are, of course, rife, investors should remember that “many world-class European companies … don’t rely on the European consumer”. The fund’s total expense ratio is 1.58%.
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Cazenove European Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Publicis Groupe S.A. | 2.81 |
| ENI S.p.A. | 2.39 |
| Davide Campari-Milano S.p.A | 2.29 |
| Sanofi S.A. | 2.26 |
| Bayer AG | 2.25 |
| Intesa Sanpaolo S.p.A | 1.94 |
| AXA S.A. | 1.85 |
| Metro AG | 1.87 |
| Deutsche Lufthansa AG | 1.38 |
| E.ON AG | 1.37 |