By Jenne Mannion Cazenove Fund Management this week launches its European Smaller Companies fund. ...
By Jenne Mannion
Cazenove Fund Management this week launches its European Smaller Companies fund.
The fund will be managed by Adrian Bignell, who has a total of six years investment experience with Cazenove.
The portfolio will target fast growing European companies outside the UK. It will be structured as a new subfund of the open ended investment company incorporated in Dublin.
The portfolio is designed to capitalise on Cazenove's proven success in Europe, led by Jean Marc-Fraysse, manager of both the Cazenove European fund and Cazenove Pan-European fund.
Shares will be quoted in sterling, dollars and euros with the base currency as sterling.
Bignell will use a bottom up investment process with a country and sector overlay, looking for quality companies with visibility and sustainable earnings.
The portfolio will be benchmarked against the HSBC Europe ex UK Smaller Companies Index.
Bignell said: "We use a focused list of approximately 200-250 companies which are then distilled into a portfolio of between 50 and 70 stocks." Bignell said Cazenove defines smaller companies as those with a present market capitalisation of up to e1.5bn (£900m).
He said: "This recognises that in a fast moving sector, driven all the time by new advances in technology, the re-rating process from small to large can often be dramatic. It also reflects the importance we place on smaller companies having liquidity." The sector investment strategy in the Smaller Companies fund will strongly reflect the bias of the existing Cazenove European Fund. It will be underweight financials, utilities, basic industries, raw materials and cyclicals, while overweight technology, media and service companies.
Bignell added: "The team believes the outlook for technology remains very positive both in the short and long term. European technology spend is still only 3-4% of GDP versus 7% in the US. There is great potential for a lagging Europe to catch up with the US."
Although the objective of the fund is to achieve long-term growth through equity investment in small cap companies, the fund may also invest in convertible securities, including bonds of investment grade or below, debentures, notes or other securities.
The fund may invest up to 5% of its assets in open ended investment schemes and may invest up to 5% of its assets in private equity.
Bignell said: "This is an excellent time to launch a fund specialising in smaller companies in Europe. As well as trading at unprecedented discounts to their larger peers in selective sectors, European smaller companies benefit particularly from a number of long-term trends. These include a growing European equity culture, improving market liquidity, deregulation and fiscal reform."
There is an initial fee of 5% on the fund, and a 1.25% annual management charge. Minimum investment is £5,000. IFA commission is 3% initial.
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