Threadneedle European Select Z

Fairly concentrated portfolio of mainly large-cap continental European equities.

  • 170.07p Price (Inc)
  • 219.77p Price (Acc)
  • 0.00% Initial charge
  • 0.75% Annual management charge
  • 0.83% Ongoing charges
  • 1.10% Yield

Prices as at 05 December 2019, fund data last updated 05 September 2019

The fund aims to achieve capital growth by investing in a relatively concentrated portfolio of continental European equities. The fund has a multi-cap approach, but the bulk of investments are in larger companies. Managers Dave Dudding and Benjamin Moore look for high quality businesses, defined as those with strong competitive advantages such as barriers to entry, that can deliver sustained, above-average growth in their sales and profits. Once invested they typically hold these stocks for a long period, selling only when their investment case has materially changed.

Fund summary

Sector Europe Excluding UK
Structure OEIC
Launched October, 2012
Size £1,589m
Yield 1.10%
Charging basis Income
Dividends paid May

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.83%

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Investment process

The managers invest primarily in large and mid-cap continental European companies that operate globally. They look for quality businesses which have competitive advantages and therefore high and sustainable long term returns, as they believe these are often mispriced by the market. They analyse competitive advantages through the Porter Five Forces framework, looking at factors such as barriers to entry and customer power to assess their business models. Stocks tend to enter the portfolio with high conviction. Risk control is one of the key elements of the process, with risk primarily controlled through the quality focus. The fund typically has high weightings in the consumer and pharmaceutical sectors, which have strong brands and patents respectively. By contrast, there are few holdings in the oil & gas, financials and utility sectors, where there is little pricing power. Ideas are generated by the European equity and broader teams, which work closely together. The process includes macro and thematic overlays, quantitative screens and company meetings. Despite the top-down elements, stock research is primarily bottom-up. Ideas are shared across the European team, but the managers’ approach on this fund is longer-term and less valuation-sensitive than that of their colleagues.

Dudding has a track record dating back to 2002 which shows he can deliver impressive returns in a variety of market conditions. He developed his process on the Threadneedle European Smaller Companies fund, but his success on the European Select fund since 2008 shows he is equally adept at large-cap investing. In 2019 co-manager Benjamin Moore joined the team, replacing Mark Nichols. Dudding and Moore focus on high-quality companies which tend to have relatively stable earnings and hence share prices. As a result the fund typically displays defensive characteristics, with lower volatility than the market and offering a degree of protection from falling markets.

Manager research

Average monthly relative returns

  • 14/15 0.00%
  • 15/16 0.00%
  • 16/17 0.00%
  • 17/18 0.00%
  • 18/19 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.35%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.00%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

David Dudding / Benjamin Moore

Dudding is a portfolio manager on Threadneedle's European equity team. He graduated from Wadham College, Oxford University, in 1993 with a degree in modern history. He then spent three years working for a British conglomerate in Hong Kong. On moving back to the UK he worked as a financial journalist, before returning to Oxford to study for a masters degree in European Politics. He joined Threadneedle as an analyst in 1999 and ran its European Smaller Companies fund from 2002 until 2013. In 2008 he took control of the European Select fund. He is a Chartered Financial Analyst (CFA). Moore is a portfolio manager within the European equities team and has co-managed the European Select strategy since April 2019. He joined the team in 2015 as an equity analyst, responsible for researching small-cap European companies. In this role, he was also deputy manager of the Threadneedle European Smaller Companies strategy. He previously spent six years with Goldman Sachs, where he worked as an equity research analyst within the European mid cap team. Moore holds an MA in History of Art from Cambridge University and studied Music at the University of the Arts, Berlin. He also holds the Chartered Financial Analyst designation.

Track record

The track record of David Dudding / Benjamin Moore in managing mutual funds in this sector is still too short for us to draw any meaningful conclusions and so our assessment is based largely on qualitative aspects.

Periods of worst performance

Absolute -4.00% (July 2019 - October 2019)
Relative -2.00% (July 2019 - September 2019)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Top 10 holdings

Data accurate as at 31 August 2019

5.6% Pernod-Ricard
5% Relx Plc
4.8% Unilever Nv
4.8% L`Oreal
4.1% Adidas Ag
4% Dassault Systemes Sa
3.7% Sampo Oyj
3.6% Amadeus It Group Sa
3.5% Brenntag Ag
3.5% Novo-Nordisk As
Source: Trustnet

Sector breakdown

Industrials 27.00%
Consumer Goods 26.00%
Health Care 12.00%
Technology 12.00%
Basic Materials 8.00%
Consumer Services 5.00%
Financials 4.00%
Telecommunications 2.00%
Money Market 2.00%

Portfolio

40-60 stocks. Expected tracking error (ex ante) 3% to 8% p.a. Max cash 5%.

Constraints

Stock positions within +/-5% of benchmark weight and unlikely to exceed 7%. There are no set country/sector maximum or minimum weights.

Key Investor Information - Income

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Key Investor Information - Accumulation

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