e-fundresearch: Which benchmark do you adhere to?
Durel: The fund’s benchmark is the SBF250 index, which consists of the 250 largest market capitalisations of Euronext quoted in Paris, taken among the ones with more than 5% of annual turnover.
e-fundresearch: Are you also responsible for other funds at the moment?
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Durel: Yes, I am also responsible for institutional funds.
e-fundresearch: What is the total volume that you manage in all your funds?
Durel: € 342 mns as of 30/06/2010.
e-fundresearch: Regarding the performance: which performance did you achieve since the beginning of the year and in the years 2004-2009? Absolutely and relatively to the relevant benchmark?
Durel: Since the beginning of the year and as at end of June, I registered a performance of -6.2%. The benchmark decreased by -8.5%.
In the years 2007-2009, I achieved a performance of -16.7%, and the benchmark -21.4.
e-fundresearch: How content are you with your own performance in the last years and this year?
Durel: Given the fact that I am obliged to keep the fund always fully invested in equities, I am satisfied to have been able to achieve a better performance than the benchmark in an environment where equity market declined. In addition, this result has been achieved with the same volatility as the benchmark.
e-fundresearch: How are you able to deliver added value for your investors with your performance?
Durel: Fundamental stock picking comes first and foremost when constructing the portfolio. Stocks are selected following a rigorous process, the central step of which consists of the fundamental analysis of the company, based on the work of Fidelity research analysts but also on my own meetings with the management company, during which I can leverage my previous working experience as a financial analyst. My aim is to identify companies offering a superior risk-return profile, with an absolute upside potential in excess of 20%.
I also like to enrich this bottom-up process by a top-down approach, with the aim of finding investment themes.
e-fundresearch: How long have you been a fund manager already?
Durel: I have been a fund manager for three years and a half.
e-fundresearch: What were your biggest successes and your biggest disappointments in your career as fund manager?
Durel: My biggest success since I began to manage funds was the investments in shares of the Channel tunnel operator Eurotunnel, when the company refinanced its debt into equity in 2007-2009.
e-fundresearch: What kind of capital market situation do we have at the moment? How do you act in this environment?
Durel: Macro-economic acceleration in the first half of the year has had a number of positive effects on company profits, amplified by the drop in the euro against the dollar and the yen, and combined with the full year effects of cost reductions occurring in 2009.
The sovereign debt crisis in Europe could, however, limit the degree of macro and micro-economic recovery. The instigation of austerity plans on a scale unprecedented since the Second World War has made it possible to avoid a monetary explosion scenario, but is also likely to have a negative impact on the European economy. European growth should continue to be relatively sluggish over next few years, without actually shrinking, due to the historically low interest rates and the weakness of the euro.
Within this context of uncertain recovery, the European equities markets are characterised by an attractive valuation compared with other equity markets and asset classes (PER 12x 2010 & 10x 2011).
Several themes are drawn on in the portfolio, such as the resumption of productive investment through cyclical securities (Vallourec, Schneider, Cap Gemini...), the growth of emerging countries for growth equities (Groupe Seb, Christian Dior, Remy Cointreau..) and yield values for asset-based securities (GDF Suez, Total...).
e-fundresearch: What are the special challenges in this environment?
Durel: The financial sector weighs a significant part of the total French equity market. In addition, it has been particularly volatile since the beginning of the year. As a result, monitoring the fund’s exposure to financial companies is a key challenge for the fund’s performance. To deal with this challenge, I decreased the fund exposure to financials in the second quarter, when specific risks emerged for the sector with the sovereign debt crisis. I increased the exposure back in July, following the reassuring news concerning the stress test scenarios and Basel III regulations.
Besides, another challenge resides in the low market liquidity for the smallest companies. In the aim of controlling the fund’s liquidity, I increased my selectiveness regarding the small and mid cap companies during the second quarter, by selling off a few positions in that area.
e-fundresearch: What objectives do you have till the end of the year and in the mid term for the upcoming 3 to 5 years?
Durel: I aim to find the most attractive stocks to generate a benefit for the investors.
e-fundresearch: What motivates you in your job?
Durel: I am particularly interested in finding new investment ideas which create an added value for the investors.
e-fundresearch: What other profession would you have taken interest in, apart from becoming a fund manager?
Durel: A quite difficult question as I am 100% satisfied with my current occupation... let’s say that in another life, I may have been a screen writer.
e-fundresearch: Thank you for the interview!