fund
Threadneedle European Select Z
Fairly concentrated portfolio of mainly large-cap continental European equities.
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175.96p
Price (Inc)
These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.
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229.45p
Price (Acc)
These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?
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0.00%
Initial chargeSome funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!
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0.75%
Annual management charge
This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).
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0.83%
Ongoing charges
This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.
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0.90%
Yield
How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…
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 | £1,469m |
| Yield | 0.90% |
| 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% |
Allocation
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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
- 15/16 0.00%
- 16/17 0.00%
- 17/18 0.00%
- 18/19 0.00%
- 19/20 0.82%
Bestinvest MRI
- 3 years 0.00%
- 5 years 0.00%
- Career 0.82%
- 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 | -12.00% (December 2019 - March 2020) |
| 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.
Allocation
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Top 10 holdings
Data accurate as at 31 January 2020
| 4.7% | Relx Plc |
| 4.5% | Pernod-Ricard |
| 4.3% | Novo-Nordisk As |
| 4% | Dassault Systemes Sa |
| 3.9% | Nestle Sa |
| 3.8% | L`Oreal |
| 3.5% | Brenntag Ag |
| 3.4% | Amadeus It Group Sa |
| 3.3% | Asml Holding Nv |
| 3.3% | Lvmh Moet Hennessy Vuitton Se |
| Source: Trustnet |
Sector breakdown
| Industrials | 28.00% |
| Consumer Goods | 25.00% |
| Health Care | 12.00% |
| Technology | 12.00% |
| Basic Materials | 10.00% |
| Consumer Services | 4.00% |
| Financials | 4.00% |
| Cash & Cash Equivalents | 3.00% |
| Telecommunications | 1.00% |
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.