Fund Objective

The current policy is to invest for capital growth without any distribution target.

View on Past Performance

European stock markets had a volatile quarter, buffeted by concerns over US interest rates and worries over the outlook for global economic growth. The fund ended the quarter ahead of the FTSE Europe ex UK Index. Relative returns were boosted by holdings across a number of sectors including industrial metals and oil & gas producers. The two biggest stock-level contributors to performance were from holdings in steel companies.An overweight position in Swedish steel producer, SSAB Svenskt Stal was beneficial as the company's first-quarter profits beat forecasts thanks to soaring steel prices, while the fund's holding in ThyssenKrupp also boosted returns as the German steelmaker announced a 72% rise in second-quarter profits and raised its full-year forecasts.However, not holding Arcelor proved the biggest detractor to the fund's relative performance as the Luxembourg-based steel company surged after receiving an improved takeover offer from Mittal Steel. At the sector level electricity stocks were the biggest detractor, including a holding in Nordic power utility,Fortum, which fell slightly over the quarter as energy prices ebbed. However, the fund benefited from a holding in Oriflame Cosmetics, a Swedish cosmetics group whose first-quarter profits jumped 28% thanks to strong Latin American demand.

Future Expectations

European equities continue to be well supported by strong external and domestic demand, while ongoing restructuring at the micro level is boosting valuations across a number of markets. The main risk is that global economic growth is choked by an overzealous European Central Bank or US Fed, which would hit earnings growth.

Fund Details