Michael Clements, Portfolio manager "Franklin European Growth A (acc) EUR" (22.11.2010): "Anti-austerity labor protests in France, Greece, Spain and elsewhere continued in October, but most European stock markets were undeterred. Regional outperformance was driven by strong equity returns in Portugal, Greece and Germany. Eurozone economic sentiment was at its most optimistic in nearly three years, which contrasted with the bloc’s 12-year high unemployment rate. Even so, the number of unemployed people in Germany fell below the three-million threshold and hit its lowest level since 1992, while Spain’s quarterly jobless rate unexpectedly fell, albeit slightly, for the first time in more than three years after major labor reform. Outside the eurozone, the UK joined the austerity movement and rolled out sweeping public spending cuts to address its massive budget deficit despite third-quarter economic growth that was stronger than expected." Frédéric Plisson, fund manager "Echiquier Major" (24.11.2010): "The market is running at two speeds. On the one hand, there are companies who are taking full advantage of worldwide growth such as DANONE and L’OREAL. On the other hand, there are companies with further difficulties because they generate most of their turnover in zones with low growth such as Europe and the United States. At Financière de l’Echiquier, we invest only in companies who are leaders in their sector and many of these world leaders are in Europe. The European markets are therefore an asset class to be favoured and in particular the German market which is the top student in the zone." Nigel Bolton, fund manager "BGF European Focus Fund A2 EUR" (23.11.2010): "Despite the recent rallies, we believe that Europe offers very attractive valuations, especially relative to other developed world economies. European equity valuations also compare favourably to other asset classes. Equities are currently trading at close to fifty year lows relative to bonds and many technical experts believe we are now close to a breakout point of sustained outperformance. Earnings growth has been a key driver of share price performance since the start of the year and we expect this to continue into 2011. On that basis we currently have a bias towards companies that are likely to deliver consistent earnings growth."
Alex Darwall, fund manager "Jupiter JGF European Growth L EUR" (24.11.2010): "Different investors tend to favour different valuation metrics according to the whims of fashion and the position in the economic cycle. For example, in a growth phase, where cashflow is little more than a promise, metrics such as EV/EBITDA (anticipated earnings) multiples are popular whereas, in the depth of a recession, a cautious measure such as price to book (assets) may be favoured by nervous investors. In the current market, generally favoured metrics include: strong, profitable sales growth that delivers rising cash flows, strong balance sheets and attractive price/earnings multiples."
Thorsten Winkelmann, Portfoliomanager "Allianz RCM Wachstum Europa - A - EUR" (23.11.2010): "Generell gilt, dass die Bewertung einer Aktie immer von besonderer Bedeutung ist. Die Bewertung allein sollte aber nicht entscheidend sein für die Auswahl von Aktien. Hier achten wir als Growth-Investoren auf die Gewinnentwicklung, das Momentum der Gewinnrevisionen und die Erträge auf das investierte Kapital. Ein eher Value-orientierter Anleger würde hingegen stärker auf die Dividenden und auf den EnterpriseValue achten."
Frage 2
e-fundresearch: "How do you interpret these facts & figures and what do you expect from the European equity markets in the next 6-12 months?"
Michael Clements, Portfolio manager "Franklin European Growth A (acc) EUR" (22.11.2010): "We believe a concentrated, yet diversified portfolio of high quality companies with sustainable business models has the potential to produce above-average risk-adjusted return over the long term. We seek companies that have a clear competitive advantage and strong absolute returns, strong balance sheets and free cash flow supported by management team focused on the creation of shareholder value. Those companies have the potential to deliver good performance throughout turbulent economic phases."
Frédéric Plisson, fund manager "Echiquier Major" (24.11.2010): "We are rather optimistic concerning European securities because Europe represents a pool of particularly dynamic companies in today’s global world. European companies have managed to adapt better than the others, seeking out growth where it is. We are expecting excellent performance in the upcoming months keeping in mind that we must continue to be highly selective in our choices."
Nigel Bolton, fund manager "BGF European Focus Fund A2 EUR" (23.11.2010): "Valuation is an important component of the rigorous bottom up fundamental analysis which allows us to identify the most attractive stock ideas within Europe. As part of their research the analysts conduct a thorough industry and company analysis of growth prospects, competitive pressures and operational risk assessments. The analysts then use a range of valuation techniques depending on the company and sector. These include valuation multiples such as PE, P/BV, EV/Sales, EV/EBITDA, FCF yield and dividend yield, as well as cash flow valuation techniques based on long term projections (DCF, EVA, Cash Flow returns)."
Alex Darwall, fund manager "Jupiter JGF European Growth L EUR" (24.11.2010): "In my opinion, these metrics by themselves are of limited use. More important is the discovery of businesses that have a unique product or service which gives them strong growth prospects, not only in their local markets but internationally. The fact that they are successful on the global stage means they are less likely to be affected by domestic issues.
I have a clear model for the type of businesses I consider to be long term winners: they are providers of specialist products or services often protected by intellectual property rights; they command oligopolistic positions in areas of long-term structural growth. Thus they have little need to weaken their balance sheets by taking on extra debt in order to supercharge pedestrian earnings. They have highly competent management teams, are not dependent on currency fluctuations, do not operate in regulated areas and are not part-owned by the French government.
It may seem like an abnegation of duty but I have no opinion about the direction of equity markets for the next 6-12 months. The effect of quantitative easing by the US alone appears enough to inflate asset prices globally, e.g. assets related to commodity prices have already responded. What I do expect over the next 6-12 months is for the companies in my Fund to continue to deliver good business performance - a characteristic of winners.
At the moment we are operating in an artificial environment. Capital markets have been distorted by ultra low interest rates as the global authorities try to support Western consumption and avoid the sharp contraction in credit that we would have otherwise seen after the collapse of the Western property bubble in 2008. Many companies are accumulating cash on their balance sheets and appear to be in good condition, but they remain reluctant to invest because of the current high degree of uncertainty in the West.
In such an environment I continue to look for companies with long-term structural growth opportunities, especially where these can be found in areas experiencing strong economic growth. The fact that the companies I invest in have performed so strongly during the credit crisis is in my view a testament to the validity of this approach."
Thorsten Winkelmann, Portfoliomanager "Allianz RCM Wachstum Europa - A - EUR" (23.11.2010): "Im internationalen Vergleich erscheinen europäische Aktien derzeit günstig bewertet. Sie werden mit einem deutlichen Abschlag zu den USA und zu Emerging Markets gehandelt. Das spricht in unseren Augen für den europäischen Markt.
Wir befinden uns in einem mehrjährigen Entschuldungsprozess der europäischen Staaten, in dem Regierungen nun sparen müssen. Dass die Wirtschaft dennoch wachsen kann, liegt in der akkommodierenden Geldpolitik ebenso begründet wie in der guten Haushaltslage vieler Unternehmen, die eigene Cashflows für Investitionen nutzen können. Überall wo der Markt sich damit entfalten kann, gibt es Auftriebskräfte. Die Frage des starken oder schwachen Euro ist relativ. Man muss auch die Entwicklung des Euro gegenüber den Währungen der Emerging Markets betrachten, nicht nur gegenüber dem US-Dollar. Generell würde ein billiger Euro den europäischen Unternehmen helfen.
Die gegenwärtige Phase ist durch ein im langfristigen Vergleich unterdurchschnittliches Wirtschaftswachstum und unterdurchschnittliches Gewinnwachstum gekennzeichnet - ganz anders als in den 80er und 90er Jahren. Aktien mit überdurchschnittlichem Gewinnwachstum sollten sich für die Anleger besonders lohnen. Im Vergleich zu den stark schwankenden Märkten der vergangenen Jahre kann ein Szenario schwächeren Wachstums auch positive Seiten entfalten. Es muss sich keine neue spekulative Blase bilden. Wichtig für die Anleger ist, sich auf einen Investmentstil oder Stilmix zu konzentrieren und aus fundamentaler Sicht zu investieren, nicht einfach mit dem Markt zu laufen. Wir sind in der jetzigen Phase von den Aussichten unseres Ansatzes "strukturelles Wachstum" sehr überzeugt."
Frage 3
e-fundresearch: "Which over- and underweights do you currently hold?"
Michael Clements, Portfolio manager "Franklin European Growth A (acc) EUR" (22.11.2010): "We are overweight in Industrials and Consumer Discretionary and underweight in Financials. We hold no banks at present. Typically, no individual industry will represent more than 35% of the portfolio, at cost. Furthermore, typically, no individual security will represent more that 5% of the portfolio, at cost."
Frédéric Plisson, fund manager "Echiquier Major" (24.11.2010): "At Financière de l’Echiquier, we never construct our portfolios in relation to an index. We only use convictions. The Echiquier Major fund is an equally-weighted fund with about fifty securities. Winning strategies are favoured and especially activities that have strong barriers to entry and creators of new markets. The industrial sector, consumer services and consumer goods each represent more than 20% of our portfolio. Echiquier Major is hardly present in sectors where there is no size premium such as commodities, financial institutions, telecom operators and utilities. These choices explain our excellent performance."
Nigel Bolton, fund manager "BGF European Focus Fund A2 EUR" (23.11.2010): "At the end of October, the Fund is positioned overweight in Consumer Discretionary, Materials and Industrials and underweight in Financials, Utilities and Telecommunications."
Alex Darwall, fund manager "Jupiter JGF European Growth L EUR" (24.11.2010): "The Fund is currently overweight Consumer Services, Technology and Healthcare compared to the Fund’s benchmark, the FTSE World Europe (inc UK) Index. The Fund is underweight Financials, Oil & Gas and Telecommunications sectors. The Fund is positioned to aim to benefit from companies that are exposed to global growth, particularly in fast-growing economies such as Brazil, India and China, and that have strong balance sheets, productivity-enhancing and cost-saving products and services that are attractive."
Thorsten Winkelmann, Portfoliomanager "Allianz RCM Wachstum Europa - A - EUR" (23.11.2010): "Wir sind übergewichtet in den Konsumsektoren und bei den Industriegütern. In geringerem Maße übergewichten wir Informationstechnologie und Gesundheitswerte. Dabei leitet sich die Sektorallokation von der fundamental getriebenen Auswahl der Einzeltitel ab. Ich möchte als Beispiele für Konsumaktien hier Carlsberg, Inditex und Jeronimo Martins nennen, aber auch LVMH. Im Industriegütersektor setzen wir auf Schneider und Legrand. Untergewichtet sind wir in den Sektoren Versorger, Energie, Rohstoffe und Telekommunikation."
Frage 4:
e-fundresearch: "Please comment on the performance and risk parameters of your fund in the current year as well as over the past 3 and 5 years."
Michael Clements, Portfolio manager "Franklin European Growth A (acc) EUR" (22.11.2010): "Performance as of October 31:
Stock selection within the information technology, health care and financials sectors benefited results. In contrast, an overweighted allocation in industrials, an underweighted allocation in materials and stock selection among consumer discretionary investments, along with zero holdings in the telecommunication services and utilities sectors, negatively impacted relative results.
Performance as of October 31: 19,05: 1 year; -3,52: 3 years; 35,91: 5 years."
Frédéric Plisson, fund manager "Echiquier Major" (24.11.2010): "The investment strategy for the Echiquier Major fund has been offering remarkable performance since the beginning of the year: +20.1% (vs. +6.4% for DJSTOXX 600). This is not surprising since, over the long term, leaders resist crises the best. They can consolidate their position and continue to invest thanks to their equity. They widen the gap further with their weakened competitors and even buy out some of them. That is what RECKITT BENCKISER did by buying SSL INTERNATIONAL or HEINEKEN by buying FEMSA. Crises such as those that we have just gone through reveal these exceptional models like PEARSON or GEBERIT and Echiquier Major’s choices have paid off because the fund is sporting +3.4% at 3 years (vs. -26.5% for DJSTOXX 600) and + 35.5% at 5 years (vs. -9.9% for DJSTOXX 600)."
Nigel Bolton, fund manager "BGF European Focus Fund A2 EUR" (23.11.2010): "We have deliberately not imposed any arbitrary constraints on the weights of regions, countries and sectors for the BGF European Focus Fund. Instead, we focus on the contribution that individual stocks and factors have to risk. The fund is subject to stringent portfolio construction disciplines, which have been designed to ensure that all the risks in the portfolio are deliberate, diversified and appropriately scaled. The investment process for the Fund is built around rigorous in-depth stock analysis and as such we aim for the majority of risk to come from stock selection. The performance attribution for the Fund over recent years confirms that we have succeeded in matching our risks to our convictions as accurate stock selection has consistently generated the majority of alpha."
Alex Darwall, fund manager "Jupiter JGF European Growth L EUR" (24.11.2010): "For the current year to 31 October 2010, the Fund has returned 27.6% in euro terms compared to 15.6% for its benchmark, the FTSE World Europe Index.
Over the last three years to 31 October 2010, the Fund has returned -2.8% compared to -23.3% for its benchmark.
Over the last five years to 31 October 2010, the Fund has returned 36.1% compared to 8.7% for its benchmark.
Five year table to October 2010
The Fund is not managed against specific risk objectives. The Manager is aware of the tracking error and volatility of the Fund; however, the Fund will bear little resemblance to the benchmark.
Jupiter firmly believes its fund managers should be responsible for managing their own performance and risk, as befits Jupiter’s corporate style. This freedom requires us to have a comprehensive monitoring process in place to spot any warning signs of underperformance, potentially unjustifiable risk, or an unsuitable style for a particular fund. To ensure this process is both proactive and rigorous, our independent portfolio analysis team use both ex-post and ex-ante measures, results of which are readily available to the fund managers."
Thorsten Winkelmann, Portfoliomanager "Allianz RCM Wachstum Europa - A - EUR" (23.11.2010): "Über die vergangenen 3 und fünf Jahre hat der Fonds deutlich outperformt, etwa 26% über drei Jahre. Dabei war die Aktienauswahl eindeutig ausschlaggebend. Carlsberg, Elekta, Saipem und Inditex lieferten die besten Performancebeiträge. Über die vergangenen fünf Jahre ergibt sich eine kumulierte Outperformance von mehr als 50%. Hier tragen Inditex, ABB, H&M und Carlsberg führend zur Performance bei. Misst man das dabei eingegangenen Risiko anhand der Schwankungsbreite der relativen Returns, so erhält man einen Tracking Error, der die Zahl 8 nie überwunden hat, aber oft über 5 lag. Diese Kennzahl zeigt neben Risiken auch Chancen auf. Fragt man nach dem Verlustrisiko, so zeigt der Parameter Value at Risk, dass dies für den Fonds deutlich kleiner war als für den Markt."
Frage 5
e-fundresearch: "Where do you see opportunities and risks for European equity markets for the next 12 months?"
Michael Clements, Portfolio manager "Franklin European Growth A (acc) EUR" (22.11.2010): "Through our bottom-up process and focus on downside risk, we continue to find opportunities in both the consumer discretionary and industrial sectors."
Frédéric Plisson, fund manager "Echiquier Major" (24.11.2010): "We expect the leading companies to be more active in terms of mergers and acquisitions and to acquire new know-how and new technologies. European companies will continue to take advantage of the explosion in consumption in the emerging countries. Business models like SAP or DASSAULT SYSTEMES will benefit from capital expenditures because they render further gains for their clients. Finally, many European companies are still undervalued and as such there are great opportunities for the taking in 2011, primarily in the southern countries of Europe."
Nigel Bolton, fund manager "BGF European Focus Fund A2 EUR" (23.11.2010): "Our outlook remains positive for European equities although we expect the well-publicised economic headwinds and periphery risks within the region to continue to create some volatility. Europe remains under owned and valuations continue to look compelling on a relative and historic basis. Europe also looks attractive on a yield basis with many European companies committing to or confirming dividend policies. With European valuations low and many companies holding net cash on their balance sheets we have begun to see an increase in M&A activity which we would expect to continue in coming months. We feel it is important to distinguish between the economic situation within the region and the outlook for European corporate profitability. Europe offers many opportunities to invest in undervalued,well-managed companies that are well positioned to benefit from their exposure to regions showing the strongest growth potential."
Alex Darwall, fund manager "Jupiter JGF European Growth L EUR" (24.11.2010): "European equities are currently trading at attractive valuations because the sovereign debt positions of some member states are regarded as fragile by the bond markets. This clearly remains a major market risk although the European authorities appear to be of the mindset that no country can be allowed to default. Nevertheless, market uncertainty will grow in proportion to the lack of resolve shown by EU politicians. The other risk is that growth may falter, especially as Germany’s strong economic performance this year has been based on trade with China, which appears to be set on moderating its own economic growth rate to contain inflationary pressures.
We continue to see opportunities to invest in quality companies at attractive prices and to take advantage of market weakness to add to core holdings."
Thorsten Winkelmann, Portfoliomanager "Allianz RCM Wachstum Europa - A - EUR" (23.11.2010): "In dieser Phase geringen aber positiven Gewinnwachstums mit in einer gewissen Bandbreite seitwärts laufenden Märkten wollen wir durch die gezielte Aktienselektion mit Unternehmen, die strukturell wachsen, deutlich höhere Erträge erzielen als der Vergleichsmarkt. Risiken gibt es überall da, wo hohe Ausgaben allenfalls mäßigen Einnahmen gegenüberstehen, wo Unternehmen unter Preisdruck geraten können, an Wettbewerbsfähigkeit verlieren. Wir sehen Chancen durch anhaltende strukturelle Trends in Wirtschaft und Konsum. So müssen viele Öl- und Bergbauunternehmen in Infrastruktur und Anlagen investieren. In diesen Bereichen erhalten Industriegüterunternehmen viele Aufträge. Mit sich ausbreitendem Wohlstand - und auch Wohlstandskrankheiten - wächst in vielen Ländern die Nachfrage nach Konsumgütern und besserer medizinischer Versorgung."
Alle Daten per 15.11.2010 in Euro: