Fund Objective

Income generation, and additionally capital appreciation.

View on Past Performance

The fund returned -14.4% over the quarter versus the MSCI Europe ex UK and MSCI Europe ex UK Value indices, which fell -11.4% and -12.3% respectively in sterling terms.The underperformance was primarily concentrated in two main areas in which we have overweight stances relative to the benchmark. First, the energy sector underperformed the broader market as the oil price fell, and second, our stock selection within industrials was poor - several companies retraced share price gains made in prior periods.Particularly badly affected were holdings with relatively strong analyst earnings revisions, such as Bucher and D/S Norden. On a positive note, stock selection was good in financials, where we managed to avoid exposure to the biggest losers (our earnings momentum screen is still effectively helping us to avoid value traps), and our actual holdings included some of the best-returning insurance names in the sector, including CNP Assurances and Zurich Financials Services.

Future Expectations

Given that factors such as credit events, technicals, politics and fear are currently significant drivers of the European equity market, we reiterate our prediction that more volatility is likely in the months to come. However, we remain confident in the investment process and we are comfortable with our current positioning.

Fund Details