And the winner of the Europe award is...
1-year return: 10.0%
3-year return: 67.4%
European equity markets have lagged other regional stockmarkets in recent years as many countries struggle to stay out of recession, but LF Miton European Opportunities is a serial top performer – in both absolute and risk-adjusted terms.
It has outperformed the sector average by a significant margin over both one- and three-year periods. The managers’ strong risk/reward record suggests they are well placed to find good companies in the future.
Carlos Moreno and Thomas Brown have run the fund since its inception in December 2015, having chalked up respectively 23 and 18 years of experience in European equities working for companies including JO Hambro Capital Management Group and Thames River Capital, where the pair previously worked together.
With this £499 million fund, they run a portfolio of around 50 high-quality European companies using a bottom-up stock-picking approach. They favour companies that can create shareholder value through growing revenues, expanding margins and increasing return on capital, and where the value creation potential is currently not reflected in the share price.
The portfolio has a bias toward medium-sized companies with a market capitalisation of between £2 billion and £15 billion. It has a quarter of assets invested in the Nordics – Denmark, Finland, Norway and Sweden.
HIGHLY COMMENDED FUND
Despite losing its shine over the past year, Janus Henderson European Smaller Companies is highly commended due to its strong and lower-risk longer-term performance from a portfolio of younger, more entrepreneurial businesses.
Ollie Beckett and Rory Stokes, who have spent most of their careers analysing and investing in European and smaller companies shares, run a portfolio of around 90 names that is well diversified at country and sector level.
They take a more positive view of the economy than the majority of investors. Following recent policy easing in China – “such a large delta for European growth” – they expect manufacturing activity to recover in the second half of 2019.
That being said, they point to the “Japanification” of Europe continuing with growth and bond yields likely to remain low for some time.
Focus on shareholder value through growing revenues