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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 is tilted towards 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, leading to consistent above average growth in their sales and profits. Stocks are typically held for a long period, with the managers 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 £3,219m
Yield 1.0%
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 Investor Information Document, which we make available to you before you make a decision to invest, alternatively it is available on request.

Bestinvest view

Over the cycle Dudding has demonstrated his ability to pick stocks and deliver impressive returns for investors. His investment process was developed over a long period running the Threadneedle European Smaller Companies fund, but his success on the European Select fund since 2008 shows he is equally adept at investing in large cap stocks. Dudding focuses on high quality companies which tend to have relatively stable earnings and hence share prices. As a result the fund typically displays some defensive characteristics, with lower volatility than the market as a whole and offering a degree of protection from falling markets. Mark Nichols joined the fund as co-manager in July 2016.

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 80
Mid Caps 19
Small Caps 1
View all performance data for this fund

Investment process

Starting from a 1,500 company investable universe, 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. The managers looks for excellent quality global companies which have pricing power and therefore high and sustainable long term returns, as they believes 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. The active share tends to be high, and the top ten holdings typically account for around 50% of the portfolio. Risk control is one of the key elements of the process, and risk is primarily controlled through the quality check.The fund typically has high weightings in the consumer discretionary and pharmaceutical sectors, with 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.

Live feed

Bid price(inc) 159.30p
Accum units 200.94p
Fund commentary 05/07/16
Fund data updated on 24/11/17

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 80
Mid Caps 19
Small Caps 1

Top 10 holdings

As at: 31/07/2017
5.5% Unilever Nv
5% Relx Nv
4.8% L`Oreal
4.2% Sampo
3.9% Fresenius Medical Care Ag & Co.kgaa
3.9% Anheuser-Busch Inbev Sa/Nv
3.7% Pernod-Ricard
3.4% Ryanair Hldgs
3.2% Imcd Nv
3.2% Dassault Systemes Sa
Source: Trustnet

Sector breakdown

Consumer Goods 29%
Industrials 21%
Consumer Services 13%
Health Care 12%
Financials 9%
Basic Materials 7%
Telecommunications 6%
Technology 3%
Money Market 1%

Portfolio details

45-65 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
12/13 13/14 14/15 15/16 16/17   3 years 5 years Career 3 years 5 years Career
0.00%   -0.38%
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 joined the company as an analyst in 1999 and took control of the European Smaller Companies fund in 2002 which he ran until 2013. In 2008 he also took control of the European Select fund which he still manages. After graduating in 1993, he spent three years working for a British conglomerate in Hong Kong. Upon his return to the UK he worked as a financial journalist, before returning to Oxford to study for a masters degree in European Politics. Dudding graduated from Wadham College, Oxford University, in 1993 with a degree in modern history. He is also a Chartered Financial Analyst (CFA). Nichols joined Columbia Threadneedle Investments as a Portfolio Manager and Analyst within the European equities team in 2015.

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 -9% (July 2016 - January 2017)

Other funds managed

  Start Date
THREADNEEDLE EUROPEAN SELECT C1Jul 2016

Sector record since July 2016 (1 yr)




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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