As part of its fund selector analysis on Europe ex UK funds, Morningstar has identified which funds to watch based on their three-year performance.
Concentrated portfolio
The Waverton European Income Fund is managed by Charles Glasse and Chris Garston. The fund was launched in August 2005 as 2CG European Income, with the name change coming in 2016 following the acquisition of 2CG Senhouse Investments by Waverton Investment Management.
This resulted in the transfer of a number of investment professionals to Waverton, including the two managers here, as well as the fund itself. Garston and Glasse, who had worked together at 2CG from 2000, are both experienced European equity investors.
The fund aims to generate income and capital growth through a concentrated portfolio of European stocks, and typically contains between 30 and 40 holdings. The fund managers invest predominantly in giant- and large-cap stocks, but around 40% of the fund is invested in mid- and small-cap names (defined as the bottom 30% of the market by capitalisation).
The managers follow a ‘growth at a reasonable price’ approach, seeking to invest in companies that have strong management teams and which operate in industries with favourable dynamics that provide a tailwind.
As such, although the strategy is primarily based on bottom-up stock analysis, a top-down framework is incorporated.
Four key factors
The Henderson Horizon European Growth Fund is managed by Simon Rowe, who has more than 20 years of investment experience. He has been involved with the fund since its launch, initially as an analyst, then as assistant manager from March 2007 and subsequently as co-manager from April 2009.
He became the sole fund manager in October 2014 following the announcement of former lead manager Richard Pease’s departure from Henderson to Crux Asset Management. Pease had initially launched the fund in August 2002 at New Star before it transitioned over to Henderson in 2009.
The investment process is primarily bottom-up driven, and stock selection is based on four key factors: the company’s business, management, financials and valuation. The manager is not afraid to avoid index heavyweights if an investment case is lacking and the portfolio is overweight in mid-cap stocks relative to both the index and the Morningstar Category average.
The fund is largely unconstrained and can differ notably from its peers. For example, it currently has a large overweight in industrials and underweight in healthcare.
Top ranked funds
