By Adam Lewis Foreign & Colonial Investment Trust manager Jeremy Tigue is targeting Europe for high...
By Adam Lewis
Foreign & Colonial Investment Trust manager Jeremy Tigue is targeting Europe for high returns in 2001.
The £2.5bn portfolio has some 27% of its assets invested in this market compared with 14% for its global benchmark.
"Europe is the exciting area," said Tigue. "The euro is creating bigger companies which are more shareholder friendly and are not dependent on local markets. We have more in stock in Europe because of a strong demand from companies and institutions for the shares. The euro is also reasonably protected against the US and so far our strategy has worked for us."
Overall, Tigue is not looking to alter the strategy he used last year. In the 12 months to 31 December 2000, the trust's share price rose by 8.1% to 267.5p and NAV per share rose 0.25 to 296.9p. During this time the discount narrowed from 16% to 10%, although by 2 March it had widened out slightly to 11.3%.
Tigue said: "We benefited from good stock selection, the buy back of our own shares and the building up of a private stock base. We also made a big profit on selling our holding in Flemings, which at the start of the year was worth £80m and which we sold for £196m, so getting a profit of £116m."
The group was particularly pleased with its UK performance during 2000, where Tigue benefited from a lack of technology exposure. He said the portfolio had gained from investing in the so-called unfashionable stocks, such as Whitbread, Bass and Anglican Water.
Tigue said that the trust's US strategy will be to stay at the same level of investment as last year, 23.6%, and he will be looking across the water and waiting for the market to rally later in the year.
Emerging markets makes up 3% of the portfolio and Tigue sees Latin America as an attractive area, predicting that both Brazil and Mexico will perform well.
He said: "Both are getting themselves out of difficult situations and we see the economies and stock markets doing well because interest rates are coming down. There has also been structural reform and both have now become democratic. Compared with other countries share prices at the moment are low in those regions, so it looks attractive."
Investment in Japan remains at roughly 9%, and Tigue said that although performance as a whole in Japan was again disappointing, there are a pocket of good companies that will continue to make good progress and those are the ones that Foreign & Colonial has investments in.
Commenting on the its campaign, Tigue said that overall what it has been successful in doing is raising the profile of investment trusts and creating a better feel about them.
However, he said: "Some people who thought the campaign would create much more demand for investment will be disappointed, it hasn't created a much better climate."
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