Bleak news from Europe has discouraged many investors. As the FT’s Jonathan Eley says: “In aggregate it has performed less well than many other areas.” But we think the current gloom creates opportunities. Rathbone’s Jane Sydenham notes that European shares are the cheapest that they’ve been compared to the US since the start of the 1970s.
The Daily Telegraph’s Ian Cowie agrees, saying it is time “to set aside daily reports of the crisis in the eurozone or fiscal pain in Spain and consider increasing exposure to continental Europe”. One fund that offers that is Henderson EuroTrust.
This fund “has the unusual distinction of having had the same lead fund manager, Tim Stevenson, from its first day”, says Cowie. This continuity has helped it outperform the market since the start of the global financial crisis in 2007. While European shares have grown by a meagre 1.9% since then, the fund has gone up by 13.9%. This performance has earned it a five star rating from Morningstar. As a bonus it trades at a discount to net asset value of 9.7% and offers a yield of 3%.
Stevenson tells Interactive Investor that “equity valuations across Europe are similar to those of three decades ago, and yet companies are now far better managed”. He thinks that the sovereign debt crisis has been overblown, since “there are plenty of quality companies, led by reliable management, that are financially stronger than most European governments, and which are rewarding shareholders”.
He focuses on blue-chip German (28%), French (20%), Swiss (19%) and Swedish (10%) companies, but is no fan of the financial sector – it accounts for under 10% of the fund.
Contact 0800-856 5656.
Henderson EuroTrust top ten holdings
| Name of holding | % of assets |
|---|---|
| Deutsche Post AG | 5.2 |
| Fresenius SE & Co KGAA | 3.2 |
| Deutsche Telekom AG | 3.0 |
| Ericsson | 2.9 |
| Bic | 2.9 |
| Dassault Systemes SA | 2.6 |
| Adecco SA | 2.4 |
| Swedish Match AB | 2.4 |
| Deutsche Boerse AG | 2.3 |
| Saipem | 2.3 |