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TM CRUX European – September 2020 fund update

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.
  • Richard Pease has an enviable track record of investing in Europe, and on this fund he also has the help of co-manager James Milne
  • As part-owner of CRUX Asset Management, we think Pease is incentivised to perform for investors
  • We like the disciplined investment approach the managers have used throughout their investing careers
  • This fund is not on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits into a portfolio

TM CRUX European aims to grow investors' wealth over the long term by investing in large and medium-sized European companies. The fund could be used as a way to diversify the European part of an investment portfolio, or a broader global portfolio focused on long-term growth.

Manager

Richard Pease is a fund manager we've rated highly for many years. He's invested in European companies for more than three decades and built impressive knowledge of the market over this time. He ran the Jupiter European Fund from 1987 and later joined Henderson in 2001 where he ran a number of European funds. He helped to set up the investment boutique CRUX Asset Management in 2015, and is co-manager of the CRUX European and CRUX European Special Situations funds.

James Milne is this fund's other co-manager, and has significant input into how it's invested. He's worked closely with Pease for many years, at both CRUX and Henderson. The managers also have the support of research analyst Roland Grender to help look for what they think are the best investment opportunities. We think each member of the team brings different skill sets to the fund, which should also lead to a healthy dose of challenge and debate.

Process

Pease and Milne are true stock-pickers at heart. They're steadfast in their focus on the prospects for individual companies, instead of wider economic events that are less likely to impact share prices over the long run.

For this fund the managers use the same investment process that's been in place since Pease started his investing career. The companies they invest in should generate strong cash flows, recurring revenues, and have little or no debt. They like businesses that do something unique and offer a product or service that other businesses struggle to replicate or do better.

These companies should also be run by a management team with a proven track record of running a successful business, which also typically owns part of the business, making it more likely their interests are aligned with other shareholders. The managers also tend to like companies that are based in Europe but do business across the globe, so they're not only dependent on customers in the countries they're based.

While there is plenty of uncertainty in markets at the moment, the managers continue to focus on companies they believe have resilient earnings and could benefit from longer-term growth trends. This currently leads them to focus on areas such as technology, healthcare, energy efficiency, and software. Technology giant Siemens was recently added to the fund, and the managers also added to an existing investment in software company SAP.

Investors should note the TM CRUX European Opportunities Fund recently merged into the TM CRUX European Fund. The European Opportunities Fund was transferred from Sanditon Asset Management in November 2019, at which point the Sanditon business was closed. The managers at CRUX gradually altered the fund to be managed in line with their own investment process, and it has since got into a position where it's in-keeping with the existing European Fund.

The fund is managed using a similar philosophy and process to the group's flagship product, TM CRUX European Special Situations. The main difference between the two is that the latter invests across companies of all sizes, including smaller companies, which increases risk and the potential for volatility. TM CRUX European uses a more core approach and focuses more on larger companies, though it also invests in a relatively small number of companies which adds risk.

Culture

We think the team at CRUX are well-incentivised to deliver good returns for investors. Pease is a founder of CRUX Asset Management, while Milne and Grender are also shareholders, which should ensure they want the best for both the business and investors. Part of their remuneration is also based on fund performance, so again they are focused on investor outcomes.

Pease is a director at CRUX, and both he and Milne are co-managers of a few European funds. This increases their responsibilities, but each of their funds is focused on European equities and they are run using the same strategy that has been in place for many years.

Overall, we think the set up at CRUX is attractive. It focuses solely on European and UK equities and is home to a close-knit investment team. As a boutique investment house, the managers can maintain flexibility over their investment approach.

Cost

This fund's annual ongoing fund charge is 0.94%. We think there are other attractive options in the European sector available at a lower cost. The HL platform fee of up to 0.45% per year also applies.

Performance

Pease has an enviable track record of investing in Europe. His funds have performed better than the broader European stock market over the length of his career, and also since he has worked with Milne*. Please remember past performance shouldn’t be seen as a guide to the future.

Our analysis suggests the managers have a good stock-picking record, and many of the companies they’ve invested in have gone on to perform well regardless of their size, or what sector or country they're located in.

Over longer periods, their funds have tended to hold up better in more turbulent markets. For example, this fund has held up relatively well so far this year, helped by some of its investments in larger tech companies. This won't necessarily happen all the time though, and just recently investments in pharmaceuticals firms Novartis and Roche didn't hold up so well.

We expect the managers will deliver good long-term performance on this fund although of course there are no guarantees. That said, we currently have greater conviction in other funds they manage, so it doesn't currently feature on the Wealth Shortlist of funds chosen by our analysts for their long-term performance potential.

Annual percentage growth
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
Aug 18 -
Aug 19
Aug 19 -
Aug 20
TM CRUX European N/A 15.0% 3.7% -0.7% 1.4%
FTSE World Europe ex UK 15.4% 26.0% 1.4% 4.8% 0.7%

Past performance isn't a guide to the future. Source: *Lipper IM to 31/08/2020.

N/A - Full year past performance for this period is not available.

Find out more about TM CRUX European including charges

TM CRUX European Key Investor Information


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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