Fund Objective

The aim of the European Growth Fund is to achieve capital growth.

View on Past Performance

The market correction continued in August, and despite a recovery towards the end of the month, markets were weak in the month. Concerns continued about the repercussions of the subprime difficulties in the US, their impact on the banking sector worldwide and the resulting consequences on the real economy of this liquidity squeeze. The Singer and Friedlander European fund underperformed, losing 1.95%, bringing performance year to date to 8.31% vs 7.31% for the FTSE Europe ex UK.Again this month, Industrials and, unsurprisingly, Financials were the most affected sectors. Telecoms, Technology and Utilities actually gained during the period. On a country basis, Sweden and Portugal registered the heaviest losses. Of the main markets, France was down 1.1% while Germany gained 0.9%. Finland stood out, gaining 8.5%, thanks to Nokia, which represents 38% of the index and which was up strongly (14%).Economic news was more subdued this month. Quarterly GDP growth for the Eurozone was disappointing at 0.3% for Q2, below expectations.

Future Expectations

Economic news was more subdued this month. Quarterly GDP growth for the Eurozone was disappointing at 0.3% for Q2, below expectations. The discrepancy can be explained by the volatile inventory component and destocking. Now that inventories are normalised, relative to this stage in the cycle, we expect this variable not to impact GDP growth going forward.Whilst the economic fundamentals of the region continue to be strong, issues concerning subprime contagion, the ensuing liquidity crisis and their impact on the wider economy continue to dominate. The trends of new and renegotiated loans as well as loan demand will provide clues as to any adjustment to the current course. In these conditions, we expect volatility to continue and are positioning the portfolio accordingly.

Fund Details