Challenges remain for Europe. Yet relief for many European firms can be seen in the form of a weakening euro and the falling oil price. While the former could help fuel inflation and boost exports (a weakening currency makes exports cheaper for foreign buyers), a lower oil price should reduce costs for businesses and improve the spending power of the consumer.
John Bennett, manager of the Henderson European Selected Opportunities Fund, expects companies including Ahold will benefit from these trends. The Netherlands-based food retailer is a new addition to the portfolio and, according to the manager, it generates healthy cash flow of which it distributes a significant proportion to its shareholders.
The manager has, however, recently been reducing the fund's overall exposure to the consumer goods industry. Following a period of strong growth for many companies in this sector, valuations appear less attractive and John Bennett has taken profits. Holdings in Unilever and Anheuser-Busch have recently been sold, while Nestlé and Henkel have been reduced.
Another key change recently made to the portfolio is an increased weighting to domestic banks - an area where the manager has identified attractive value opportunities. Holdings including KBC, Intesa Sanpaolo, DNB, ING and Svenska Handelsbanken have recently been topped up. They have also proven beneficial to performance in recent months. In John Bennett's view, these banks are capable of generating sufficient capital to reward shareholders through dividends.
For a number of years, John Bennett has seen significant long-term growth potential in the healthcare sector. The fund’s exposure has continued to rise and now stands at almost 30%. Our analysis suggests the fund’s allocation to the sector has contributed positively to performance over the long term and some of its largest holdings include Roche, Novartis and Fresenius. The fund operates a concentrated portfolio which enables each holding to have a significant impact on performance but it is a higher risk strategy.
Our view on this fund
John Bennett is a highly experienced European fund manager and he currently manages a range of European funds. Since February 2010 when he assumed responsibility of the Henderson European Selected Opportunities Fund, he has delivered a return of 76.2%* compared with 59.2% for the average fund in the sector. Though please remember this is not a guide to the fund's future performance. John Bennett's naturally conservative approach to investing and focus on high-quality companies means the fund has tended to outperform its peers in tougher market conditions.
|Annual percentage growth|
| Apr 10 -
| Apr 11 -
| Apr 12 -
| Apr 13 -
| Apr 14 -
|Henderson European Selected Opportunities||6.4%||-6.3%||26.8%||18.6%||11.3%|
|IA Europe Excluding UK||8.0%||-10.2%||19.2%||18.0%||6.9%|
Past performance is not a guide to future returns. Source: Lipper IM* to 01/04/2015
This fund does not currently feature on the Wealth 150 list of our favourite funds across the major sectors. While we rate John Bennett as a quality fund manager, we currently have higher conviction in other funds that are currently included in the Wealth 150.
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