John Bennett is a very experienced manager with over 20 years in European equities. Initially brought over to Gartmore in 2010 he has successfully managed the subsequent transition to Henderson. For example the European Focus fund was a perennial poor performer and frequently featured in our dog list, however, since Bennett took over performance has improved dramatically. We have a high degree of confidence in Bennett and believe that he is doing something different to many other large cap European fund managers. However, we have a preference for Bennett's Henderson European Focus fund as we believe that over the long term it should produce better returns to investors.
The process begins from identifying stock or sector themes that would generate growing customer demand. Then the manager looks for potential winners in their respective business fields that have enough capacity and abilities to grow. The universe of some 600 companies is screened, using various valuation metrics, such as EV/Sales, EV/EBIT Margin, P/E and dividend yield to identifie low-valued stocks. Among the latter the team looks for businesses set to or undergoing change. When a structural reason to change is identified, it becomes a catalyst for a change in valuation. Regular company meetings are an essential part of the investment process, allowing Bennett to gain insights into the businesses he invests in. These meetings serve either to validate or change Bennett's investment thesis on a company. The manager constructs the fund to hold approximately 50-60 stocks. The major themes used for this fund will be similar to those used for the Henderson European Focus fund that Bennett also runs. However, the Selected Opportunities fund is run with a greater awareness of the benchmark.