Threadneedle European Smaller Companies Z

Invests in small and mid-cap continental European equities.

  • 201.72p
    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.

  • 225.89p
    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?

  • 0.00%

    Initial charge

    Some 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!

  • 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).

  • 0.88%
    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.

  • 0.80%
    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…

Prices as at 26 May 2020, fund data last updated 30 July 2018

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 Dicken typically holds stocks for a number of years.

Fund summary

Sector European Smaller Companies
Structure OEIC
Launched February, 2013
Size £335m
Yield 0.80%
Charging basis Income
Dividends paid 7 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 0.88%

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

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

  • 15/16 0.21%
  • 16/17 0.45%
  • 17/18 0.64%
  • 18/19 0.00%
  • 19/20 0.43%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career 0.38%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 99.80%

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 13.9 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.38%. 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.

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Allocation

Proportion (%)

  • {{chartDataItem.text}}
    {{chartDataItem.value}}

Top 10 holdings

Data accurate as at 31 January 2020

2.7% Sartorius
2.7% Kingspan Group
2.6% Sika Ag
2.6% Cts Eventim Ag & Co Kgaa
2.5% Simcorp
2.4% Eurofins Scientific Se
2.4% Diasorin S.p.a.
2.4% Just Eat Takeaway Com Nv
2.3% Imcd Nv
2.3% Sig Combibloc Group Ag
Source: Trustnet

Sector breakdown

Industrials 32.00%
Health Care 17.00%
Materials 12.00%
Information Technology 11.00%
Consumer Discretionary 9.00%
Financials 7.00%
Communications 6.00%
Consumer Staples 3.00%
Real Estate 2.00%
Money Market 1.00%

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 Information - Income

Download

Key Investor Information - Accumulation

Download