We removed our 4-star rating on this fund following the departure from Cazenove of manager Chris Rice. Cazenove’s funds were subsequently taken over by Schroders and the fund is now run by Rice’s longtime deputy Steve Cordell. Cordell has a good track record running an offshore pan European fund as well as the long/short UK Absolute Target fund.
The fund’s universe consists of all stocks listed on European exchanges with a market cap above €200m, though in practice the bulk of investments are large and mid-sized companies. The manager pursues a pragmatic approach known as business cycle investing, setting sector and style exposures based on macro-economic views which are determined at the Business Cycle team’s pan European Equity Strategy meeting. Stocks are classified into seven types; Commodity Cyclicals, Consumer Cyclicals, Industrial Cyclicals, Financials/Interest Rate Sensitives, Growth Defensives and Value Defensive. The portfolio is tilted towards stock types the manager believes will benefit in the next stage of the cycle – for instance, defensive stocks during a recession. The process also includes bottom-up analysis, with stocks being screened on both quantitative and qualitative bases before being researched in more depth. The importance attached to top-down and bottom-up analysis varies according to the stage in the cycle – "inflection points" in the business cycle are catalysts for portfolio changes.