Fund Objective

To provide long-term capital growth.The Fund aims to provide superior returns to investors by investing in smaller companies and provides them with the ability to diversify their portfolio.

View on Past Performance

European stock markets fell sharply as the credit crunch intensified; smaller companies sold off particularly heavily on rising risk aversion.The fund underperformed its benchmark as positive stock selection in the food & drug retailers and mining sectors was outweighed by negative stock selection in the chemicals sector and stock selection and an overweight position in the construction & materials sector.At the stock level, the biggest positive contributor was an overweight position in Portuguese retailer Jeronimo Martins, which rose after receiving approval from the Polish competition authorities to complete its takeover of Poland's 'Plus' chain of discount grocery stores. Also beneficial was an underweight position in department store owner Arcandor, which fell sharply over the quarter.Detractors included overweight positions in German steel trading company Kloeckner and Finnish steel maker Rautaruukki. Although both companies reported strong earnings, their share prices were hit by slowing global growth and falling steel prices. An overweight position in Auriga Industries was also detrimental as the pesticide maker fell back heavily despite reporting a fivefold increase in second-quarter profit.However, the fund was lifted by an overweight position in drugmaker Galenica, which received broker upgrades after reporting increased first-half profit on an acquisition and European sales of its anaemia medicines.

Future Expectations

European small cap stocks look attractively valued, but concerns over global economic growth may lead to further volatility.

Fund Details