THREADNEEDLE EUROPEAN SMALLER COMPANIES Z

Invests in small and mid-cap continental European equities.

  • 198.89p Price (Inc)
  • 220.89p Price (Acc)
  • 0.00% 0.00%

    Initial charge
  • 0.75% Annual management charge
  • 0.88% Ongoing charges
  • 0.90% Yield

Prices as at 30 July 2018 , fund data last updated 15 November 2019

The fund targets capital growth by investing in a diverse portfolio of small and mid-cap continental European equities. Manager Philip Dicken has a quality growth style, favouring growing companies with high returns and competitive advantages such as brands that will enable them to sustain those returns. To find them he employs a bottom-up process, using Porter’s five forces framework to assess companies’ business models. Portfolio companies are often found in niche industrial areas, but seldom in the financials sector. Once invested Heslop typically holds stocks for a number of years.

Fund summary

Sector European Smaller Companies
Structure OEIC
Launched February, 2013
Size £415m
Yield 0.90%
Charging basis Income
Dividends paid 7 May

Charges

Initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.88%

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Investment process

The fund’s investable universe is small and mid-cap companies listed in continental Europe, typically those below the top 225 companies in the FTSE World Europe (ex UK) Index – around 1500 companies. Within this the manager looks for companies with a sustainably high or improving return on capital employed, which he believes can generate long-term share price outperformance. To find such businesses he looks for companies with a sustainable competitive advantage and hence pricing power. To this end he analyses their business models using Porter's five forces: customer bargaining power; supplier bargaining power; threat of new entrants; threat of substitute products; level of competition. The process is primarily bottom-up, but confidence in a stock will be enhanced if it fits in with Threadneedle’s house economic or thematic views. Typically the portfolio will have a sizeable proportion in industrial stocks, often in niche business areas. Conversely the fund is structurally underweight financials as Dicken views these companies to have a low degree of pricing power, selling homogeneous products. Risk is primarily controlled through the 'quality' of the companies in which the manager invests.

The fund had a stellar record under former managers Dave Dudding and Mark Heslop. Following Heslop's departure in 2019 he was replaced by Philip Dicken, head of Threadneedle's European team and a specialist in small cap investing.

Manager research

Average monthly relative returns

Bestinvest MRI

14/15 15/16 16/17 17/18 18/19 3 years 5 years Career 3 years 5 years Career
0.58% 0.29% 0.44% 0.57% 0.00% 0.00% 0.00% 0.35% 0.00% 0.00% 99.70%

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

Philip Dicken

Dicken joined Threadneedle in January 2004 from Active Value Advisors where he has worked as a European analyst for five years. Prior to that he worked for Merrill Lynch.

Track record

Philip Dicken has 13.3 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.35%. During the worst period of relative performance (from July 2012 - June 2014) there was a decline of 20% relative to the index. The worst absolute loss has been 42%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is more than 99%.

Periods of worst performance

Absolute -42.00% (May 2007 - November 2008)
Relative -20.00% (July 2012 - June 2014)

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

2.9% Diasorin S.p.a.
2.9% Cts Eventim Ag & Co Kgaa
2.7% Sika Ag
2.7% Sartorius
2.6% Takeaway.com Nv
2.4% Elis
2.4% Orpea
2.4% Infrastrutture Wireless Italia Spa
2.4% Eurofins Scientific Se
2.4% Kingspan Group
Source: Trustnet

Sector breakdown

Industrials 30.00%
Health Care 17.00%
Materials 11.00%
Consumer Discretionary 10.00%
Information Technology 10.00%
Communications 7.00%
Financials 6.00%
Consumer Staples 5.00%
Real Estate 2.00%

Portfolio

Target is 80 to 100 stocks, although it has been as low as 70 and as high as 120. Typical turnover 10 stocks p.a.

Constraints

Max 3% in any individual stock (2% at purchase). Min 6 sectors, min 8 countries.

Key Investor Documents

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