Fund Objective

The fund aims to provide long term growth and is designed for investors who are looking for exposure to European equity markets, excluding the UK. The fund invests predominantly in the shares of companies listed on European stock markets and is actively managed by our investment team, who will select stocks to try to take advantage of opportunities they have identified.

View on Past Performance

European markets fell sharply before recovering ground over February, driven more by general unease than by particularly negative company news. Persistent fears of a US recession and further writedowns from financials continued to disconcert investors. Attention remained focused on more defensive stocks, although the mining sector held up well, buoyed by consolidation and commodity prices.Bid speculation also bolstered energy stocks, with Spain's Iberdrola benefiting from talk of a takeover. The ECB kept interest rates on hold at 4%, as the European Commission lowered its 2008 growth forecast for the region amid ongoing credit market turmoil and slowing US growth.The European Equity Growth Fund returned 2.81% in February compared to the IMA sector average return of 3.91%. Holding EDF was negative for performance, after it issued poor guidance and concerns persisted over its planned acquisition of Iberdrola. Telekom Austria proved another drag on performance, following a weak outlook statement amid a deteriorating domestic market.However, the Fund benefited from its investments in equipment rental company Ramirent, after the company posted results which alleviated market concerns over Finnish and Eastern European construction, and StatoilHydro, which surged on the back of a strong oil price. Our underweight position in Credit Suisse also boosted returns, as the bank issued a profit warning on the back of sub-prime exposure.We purchased Swiss surgical implant and device company Synthes, on the strength of new products and a more transparent shareholder structure. We also initiated a position in Spanish fashion distributor Inditex, as we were impressed by the company's plans for international expansion and believed the market was focusing too much on possible weakness in the company's domestic market.

Future Expectations

European markets remain susceptible to persistent recessionary expectations and ongoing concerns over liquidity within the banking sector. At the same time, Europe continues to show signs of slowing domestic activity, with earnings expectations likely to remain depressed over the near future.However, European equities are not without support, amid encouraging signs that corporate fundamentals are sufficiently robust to withstand a weaker demand environment. The region is also underpinned by favourable exposure to emerging market growth.

Fund Details