Cyrill Marquaire, you are the fund manager of the LOF-Europe High Conviction (LU0210001326
) - since when are your responsible for the fund management of this strategy and what is your general track-record with European equities?
I have been the co-manager of this strategy since November 2010. And when it comes to European Equity in general, I have worked in that field since 2000. I first started as a sell-side analyst for Credit Lyonnais Securities before moving to the buy-side in 2004 when I joined Selectium Capital, a Paris-based long-short equity hedge fund.
e-fundresearch.com: According to the prospectus, the LOF-Europe High Conviction follows a strict bottom-up approach resulting in a portfolio of 30-50 positions. Which fundamental factors do you focus on the most during the bottom-up research process and what are the key-differentiating factors / USPs of your investment strategy?
Cyrill Marquaire: We indeed consider ourselves as pure stock pickers, running a portfolio of 30 to 40 positions. We think we have two key differentiating factors. First, we do not invest in a number of sectors.
Second, we have a strategy built over 3 investment buckets, so as to aggregate positions that will not all correlate. Those 3 buckets are high quality, high growth and corporate events. So depending on each category, we will look for slightly different features.
As an example, in the high quality bucket, we will focus on companies with barriers to entry, strong brands, ability to dictate prices, etc… In the end, this should translate into stable margins, high return on equity and strong free cash flows. As these companies are highly predictable, our investment variable is the price, on which we are extremely disciplined. We might wait years to seize opportunities and are happy to do so, which translates into a very low portfolio turnover.