Bestinvest says
Jim Campbell and Francesco Conte are seasoned investors in the european smaller companies. It is therefore disappointing that the fund managers continue to be restrained by the mandate of the fund unlike the LSE listed Investment Trust (JESC) which gives the managers more discretion. Because of this we expect that the investment trust will perform better at market turning points. The fund has traditionally been more volatile than most peers in the sector.
Stock selection drives the investment process, with the managers taking some elements of the JPM TMV equity selection process. This involves screening on growth, value, earnings revisions and price momentum. The fund is structured to have a focus on growth stocks (typically companies in an expansion stage) with an allocation value companies (more solid and dependable cash flows often trading at a discount to what the manager thinks is fair value). With regard to growth the model focuses on price and earnings momentum over 12 months and earnings revisions. Price to earnings is the main value ratio. The managers also conduct frequent company meetings. For this fund, which is the OEIC, the managers have less discretion and are more tied to the model which we feel is unlikely to perform as well in volatile markets or where there are significant turning points.
with regards to positioning of the fund which is particularly useful at market turning points.