The Premier European Growth Fund aims to out-perform the FTSE World Europe Ex UK, or any successor or substitute index, in each case as modified from time to time, by 1.5 per cent per annum over rolling three year periods.
The rout in Equities which started at the beginning of September continued into October. There was a perfect positive correlation between world equity markets as there was no region that escaped the sell-off. The US equity market suffered its worst fall since October 1987 whereas Japan's monthly fall was the worst on record. Emerging markets were similarly penalised, in particular, Brazil and Russia mirroring the 23.8% fall in the Reuters commodity index.In a matter of eight weeks, European equities have wiped out effectively five years of gains. You can buy shares in Nokia today at the same price you would have paid in 1993 and SAP at the same price as in 1998. The fall in share prices witnessed in the last few weeks are moves that are seen once every twenty years - they are atypical. I would hope that the fall in the Fund's value over the corresponding period is seen in the same light.Arguably, in some ways the markets have been efficient. There can be no better example of this than Lakshmi Mittal´s blind faith in the prospects for the steel sector. As recently as October 6th, Mr Mittal told a packed auditorium that steel demand would continue to grow annually by 4-4.5%. One month later and following a share price fall of 70%, Arcelor have had to cut production targets by 30% and abandon all estimates for next year.The question now is whether, after the collapse in share prices, valuations are sufficiently low enough to accommodate all the bad economic news that is inevitably going to come our way. Profit warnings, in theory, should no longer be such a surprise to investors´ in today 's climate and therefore earnings downgrades are arguably ´in the price´ at these levels.
