PSigma Asset Management has revealed details of its new European Income fund, subject to regulatory approval, to be sub managed by European equity boutique 2CG.
The fund will invest primarily in Continental European companies and is expected to hold 30-40 stocks. It will aim to achieve a reasonable and rising income together with long-term capital growth.
2CG was founded in March 2000 and is majority owned by its founders and current directors, Chris Garsten and Charles Glasse. The duo’s primary focus is Continental Europe and they have a ‘relative value’ approach to investment.
Glasse, formerly head of M&G’s Continental Europe team, managed the £400m M&G European Dividend fund for over 10 years while Chris was a founder member of Patricia Maxwell-Arnot’s European Equity team at Credit Suisse from 1996 to 2000.
The pair see the recent market volatility as an opportunity with compelling intrinsic value for many companies, particularly in the financials sector.
Glasse says: “Income fund investors tend to be in their element during stock market corrections. As others head for the exit, unloved sectors will offer rising yields and lower risks as their valuations fall.
“This is the current situation in financials. Many investors are currently heavily orientated to industrial and commodity stocks, which have been fantastic performers and are ignoring the financials.
“Within financials, insurers are extremely lowly rated trading at a 35% discount to their 17 year history and not reflecting their longer-term growth opportunities.”
As a result, insurers will be a big part of the new fund’s portfolio but will be counterbalanced by an underweight in utilities which are trading at a big premium to their historic valuations and are just embarking on a heavy investment cycle, according to Glasse.
Banks, hit hard by their lending to highly leveraged private equity and the sub prime mortgage crisis, also offer buying opportunities given the very attractive yields available.
- The top ten stocks in the fund at launch will be:
- Total 5.7%
- Allianz 3.7%
- ING 3.6%
- SES 3.3%
- Munich Re 3.3%
- ENI 3.2%
- SNS Real 3.0%
- Zurich Financial 2.9%
- DeutscheTelekom 2.9%
- Nokia 2.9%
- Total % in Top 10 holdings 35%
PSigma European Income fund is eligible for PEPs, ISAs and SIPPs. A Fixed Offer Price period will run from 29 October – 9 November 2007. The fund will have an initial charge of 5.25% and an AMC of 1.5%. The minimum investment is £1000.IFAonline
No preferred charging model
To 1,552 families and businesses
HL and Liberty SIPP slowest
Lifetime and annual allowances