Bestinvest says
Dudding focuses on high quality growth stocks where companies have a competitive advantage or a natural barrier to entry. The earnings of these companies tend to be relatively stable and therefore more likely to outperform when markets fall. Over the cycle this is the primary way that Dudding generates his outperformance. Dudding has shown clearly that he has the ability to pick growing companies through the excellent performance of his European Smaller Companies fund. We believe that he has demonstrated this on the European Select fund which has a multicap approach.
Dudding has a very pragmatic style and is, in many ways, an old fashioned stock picker. He looks for companies who have a comparative advantage over their competitors. This leads him towards certain areas of the market. For example Dudding has a reasonable number of industrial stocks in companies that have market leading technologies. Similarly he will invest in luxury goods companies where brand loyalty means that consumers tend to be price inelastic and earnings more resilient. Another is food companies where they have significant scale and are able to dictate terms to suppliers.
The fund is focused on mid cap companies. This is not unusual for European equity managers but we will continue to watch closely the performance of the fund as assets increase. At the moment we are not concerned about asset under management.
Dudding has the resources of Threadneedle to monitor risk in the portfolio as well as the European equity team from which he can leverage ideas. However Dudding uses these resources to less of an extent than some of his colleagues with many ideas generated independently. Similarly he views risk as a function of sensible portfolio construction and buying high quality companies.
Crossover of stocks with the small cap fund is low.