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THREADNEEDLE EUROPEAN SELECT Z

THREADNEEDLE EUROPEAN SELECT Z - Overview

Overview of THREADNEEDLE EUROPEAN SELECT Z Buy in ISA Buy in Investment Account

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 Mark Nichols look for high quality companies, 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.

  • Standard Initial Charge 3.00%
  • Initial charge via Bestinvest 0.00%

Fund summary

Sector Europe Excluding UK
Structure OEIC
Launched October, 2012
Size £3,043m
Yield 1.1%
Charging basis Income
Dividends paid May

Charges

Standard initial charge 3.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.83%

Risks

Before investing make sure you have understood the risks relevant to the fund by reviewing our Risk Warnings section. Further information on the risks are contained in the fund's Key Information Investor Document, which we make available to you before you make a decision to invest, alternatively it is available on request.

Bestinvest view

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. Since 2016 he has benefited from the input of co-manager Mark Nichols, who built up a strong track record in his own right at F&C. The duo 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.

Portfolio

Allocation Proportion(%)
Equity 99
High yield bonds 0
Quality bonds 0
Property 0
Commodities 0
Hedge 0
Fund cash 1
Allocation Proportion(%)
UK 2
Europe 98
North America 0
Japan 0
Pacific 0
Emerging Markets 0
Allocation Proportion(%)
Large Caps 78
Mid Caps 21
Small Caps 1
View all performance data for this fund

Investment process

The managers invest primarily in large and mid-cap continental European companies that operate globally. They look for excellent quality businesses which have pricing power and therefore high and sustainable long term returns, as they believe these are often mispriced by the market. They analyse companies through the Porter Five Forces framework to assess their business models and competitive advantages. 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 discretionary 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.

Live feed

Bid price(inc) 162.50p
Accum units 207.28p
Fund commentary 09/02/18
Fund data updated on 14/08/18

Asset allocation

Allocation Proportion(%)
Equity 99
High yield bonds 0
Quality bonds 0
Property 0
Commodities 0
Hedge 0
Fund cash 1

Equity Geographic

Allocation Proportion(%)
UK 2
Europe 98
North America 0
Japan 0
Pacific 0
Emerging Markets 0

Equity Capitalisation

Allocation Propor
tion(%)
Large Caps 78
Mid Caps 21
Small Caps 1

Top 10 holdings

As at: 30/06/2018
5.3% Unilever Nv
4.9% Relx Nv
4.6% Pernod-Ricard
4.2% Adidas Ag
4% Fresenius Medical Care Ag & Co.kgaa
3.9% Sampo
3.9% Dassault Systemes Sa
3.6% Imcd Nv
3.6% L`Oreal
3.2% Elis
Source: Trustnet

Sector breakdown

Consumer Goods 27%
Industrials 20%
Consumer Services 12%
Health Care 11%
Technology 10%
Basic Materials 8%
Financials 6%
Telecommunications 4%
Others 2%
Money Market 1%

Portfolio details

40-65 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.
The portfolio usually has very little commonality with the benchmark and so performance can be expected to differ markedly on occasions.

Average monthly relative returns Bestinvest MRI
13/14 14/15 15/16 16/17 17/18   3 years 5 years Career 3 years 5 years Career
-0.40% 0.14%   -0.20%
Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

David Dudding / Mark Nichols

Manager. 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). Nichols joined Columbia Threadneedle Investments as a Portfolio Manager and Analyst within the European equities team in 2015. He was previously a portfolio manager in the European equities team at F&C and has worked in the industry since 2001.

Track record

The track record of David Dudding / Mark Nichols 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 -5% (October 2016 - November 2016)
Relative -8% (July 2016 - January 2017)

Other funds managed

  Start Date
THREADNEEDLE EUROPEAN SELECT C1Jul 2016

Sector record since July 2016 (2 yrs)




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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