Europe: a window to global opportunities

 

Europe is home to some of the world’s most recognised brands, leading innovators and
dominant businesses. From best-in-class operators to trailblazers expanding in emerging markets, we think Europe has much to offer.

This Sub-Fund aims to capture the diverse investment opportunities available across three distinct categories: Quality, Growth and Events. This diversified approach aims to help investors navigate economic and market cycles more smoothly.1

 

sub-fund information.

Click here to access the sub-fund information.

 

europe: a window to global opportunities.

Icone - Europe High Conviction_Emerging_markets_growth.jpg Icone - Europe High Conviction_European_landscape.jpg
397 million people
Beyond its domestic markets, some European companies also offer access to emerging markets growth.2
17 countries
The European landscape is highly varied, with flourishing businesses co-existing alongside challenged ones.3 
    Icone - Europe High Conviction_Atrractive_destination.jpg  
  € 14 trillion GDP
Europe’s sheer size makes it an attractive destination for equity investors.4
 

 

Why invest?

 

Truly active stock picking 

  • Research-intensive – the team focuses on bottom-up analysis to identify mispriced companies that can grow profitably and have a competitive edge over their peers. They also look at catalysts that may influence a company’s stock. 
  • Diversified – each investment must fit into one of three categories (see below), allowing the Sub-Fund to seek better diversification and navigate through bull and bear markets. 
  • High conviction – a highly active portfolio targeting 30 to 40 stocks, typically with a mid to large cap bias. The team favours depth over breadth.

 

Award-winning approach.5

  

4Star_Seal_OverallRating.jpg (Seal_OverallRating) Fitch_StrongSeal_TM_v2.jpg (Title) Citywire Euro Stars logo - 2017.png 5-total return.jpg (Print)
citywire-rating-aa__628x128px.png

 

A balanced allocation across three distinct categories6

 

1. Quality

Investable universe: 60-70 stocks 25-40% of the portfolio

High quality companies with a dom-inant competitive position and high barriers to entry

 

2. Growth

Investable universe: 80-90 stocks 25-40% of the portfolio

High growth companies with above-average revenue growth.

 

3. Events

Investable universe: c.150 stocks 25-40% of the portfolio

Candidates for takeovers, break-ups and other corporate events.

Examples

 

 

 

 

A global chemicals supplier proved its pricing power in an oligopoly market. It grew 5% across the cycle, with a cash-generative business model.

 

Despite the challenging consumer environment, a UK discount retailer gained market share through a focused product range and direct sourcing model.

 

A growing European telecoms company was in a consolidating sector. It was eventually acquired by a global operator.

The Sub-Fund does not invest in stocks or sectors that do not fit within the above three categories; in particular those assets that the team cannot value confidently, such as banks, insurers, miners and energy companies.

 

investment team.

 

LOcom_AuthorsAM-Dionisio.png Peter Dionisio
Portfolio manager
LOcom_AuthorsAM-Marquaire.png Cyril Marquaire
Portfolio manager
LOcom-AuthorsAM-Johns.png Henry Johns
Analyst
LOcom-AuthorsAM-Pizano.png Alexandre Pizano
Analyst

 

investment philosophy.

 

At Lombard Odier Investment Managers, we believe sustainability has the potential to drive future returns7

 

1

Sustainable financial models 
We look for attractively-priced companies that can deliver sustainable growth, which we consider to have a transparent and solid business model and have a competitive advantage over their peers.

2 Tiered portfolio construction
We believe high quality companies tend to outperform in down markets; high growth companies can benefit in rising markets; and corporate event candidates tend to profit in M&A-fuelled environments. By allocating to all three buckets, we aim to diversify the risk
3 Risk management
We believe high performance starts with stringent risk management. The team continuously monitors 12 trading and fundamental risk metrics, which also serve to maintain investment discipline. An independent risk management team monitors the portfolio alongside the investment team.

The end result 

The result is a core European portfolio that aims to outperform over the medium to long term. The team equally weights portfolio holdings, where possible, to provide sufficient diversification without diluting potential returns.

 

By taking a long-term view, we avoid betting heavily on market direction and focus instead on sustainable businesses that we believe can unlock value over time.

 

download.

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sub-fund information.

Click here to access the sub-fund information.

 

watch our video.

sources.

1 There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred.

2  Source: Eurostat, May 2018.

3 Countries within the Sub-Fund’s universe include: Germany, France, UK, Italy, Spain, Netherlands, Portugal, Belgium, Sweden, Switzerland, Denmark, Finland, Norway, Ireland, Greece, Luxembourg and Austria.

4 Source: LOIM, Millicom, ABB, Wartsila, PZ Cussons and SEB company websites. Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities.

5 Sources: Morningstar, 31 July 2018. EAA OE Europe Flex-Cap Equity. See here for more information on methodology. / Citywire, 30 June 2018. Equity – Europe. See here for more information on methodology. / Lipper Leaders – Thomson Reuters, 31 July 2018. Overall Total Return and Consistent Return categories. See here for more information on methodology. / Fitch Ratings, 3 January 2018. See here for more information. Ratings and awards subject to change without notice. Past performance is not a reliable indicator of future returns. Citywire Euro Stars at November 2017 and valid for one year. See here for more information on methodology.

6 Target asset allocation and portfolio composition represent a portfolio construction goal. Examples for illustrative purposes only. Holdings/allocations are subject to change. Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document.

7 There can be no assurance that the Sub-Fund’s investment objective will be achieved or that there will be a return on capital or that a substantial loss will not be incurred.