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A fund seeking to uncover Europe’s special situations

Kate Marshall | Thu 16 November 2017

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.
  • We view Richard Pease as one of the most experienced investors in the European sector
  • He focuses on finding unique companies with great prospects, rather than the outlook for the wider economy
  • Superior stock-picking has driven long-term performance

Our view

Richard Pease has built a formidable reputation investing in European shares. We like his unique approach to investing in European markets: he is willing to look for opportunities off the beaten track, which may have been overlooked or misunderstood by other investors.

This approach means the manager needs to uncover many stones to find companies he feels have the best growth potential. He has therefore built a strong team around him and has the support of excellent analyst resource. We believe each team member provides their own complementary skills and perspectives to running the fund.

The manager has used the same strategy to great effect for many years and our analysis suggests he has one of the best records of picking strong-performing stocks in the European sector. He currently applies his trade to the FP CRUX European Special Situations Fund, on which he has built an exceptional track record, although this is not a guide to how the fund will perform in future.

We view the fund as a superior option for investors seeking access to Europe's stock markets and it currently features on the Wealth 150+ list of our favourite funds.

What type of company does Richard Pease invest in?

From Emmanuel Macron’s presidential victory in France to Angela Merkel winning a fourth term as German chancellor, Europe has seen a string of important elections throughout 2017. While this has caused some uncertainty, European stock markets have generally performed well.

Richard Pease tends to avoid looking at broader economic and political issues and prefers to concentrate on what individual companies are getting up to. He favours companies that are based in Europe, but generate profits from across the globe, which gives them the ability to prosper regardless of the continent’s economic and political backdrop.

The manager also favours companies that offer niche products and services, and dominate their area of the market. These often generate recurring revenues, which means they produce stable and predictable profits that are likely to continue into the future.

Company in focus

Current investments include Coor, which provides other companies the opportunity to make cost savings by outsourcing certain functions, such as cleaning, catering, and postal services. 85% of Coor’s current contracts are for recurring business, which provides some certainty over their future profits.

The company’s management team also has their own money invested in the business, which Richard Pease believes makes them more focused on delivering great results and is to the benefit of other shareholders. The shares currently offer an attractive yield of 5.5%, although this should not be seen as a reliable indicator of future income.

Richard Pease runs a relatively concentrated portfolio of around 60 investments, so each can have a significant impact on returns. He also invests flexibly across companies of all sizes, including small and medium-sized companies. We feel this approach has the potential to add value over prolonged periods, although it is a higher-risk strategy.

Performance review

Richard Pease’s disciplined investment approach has worked well over the long term, although as an actively-managed fund it will inevitably experience periods of underperformance. Towards the end of 2016, for instance, the fund’s lack of exposure to some of the stronger-performing areas of the market, such as oil & gas companies and Southern European banks, held back returns.

We remain confident in the manager’s ability to deliver attractive returns for investors over the long run. Richard Pease has delivered considerable value for investors since the fund’s launch in October 2009. Over this time the fund has grown 187.4% compared with 105.0% for its benchmark, the FTSE World Europe ex UK Index, although please remember this is not a guide to how the fund will perform in future.

Annual Percentage Growth
Oct 12 -
Oct 13
Oct 13 -
Oct 14
Oct 14 -
Oct 15
Oct 15 -
Oct 16
Oct 16 -
Oct 17
FP CRUX European Special Situations 29.0 -1.0 11.2 30.8 18.3
FTSE World Europe ex UK 32.5 -0.8 5.2 19.7 19.9

Past performance is not a guide to future returns. Source: Lipper IM 31/10/17

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.

Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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