What Have Fund Managers Been Buying?

We look at which stocks the best European fund managers bought in August

Fernando Luque 6 September, 2021 | 12:39PM
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We have added Schroder European Recovery to the list of European Large Value funds. It is a relatively small fund, compared with the other selected funds, and is categorised as a European ex UK Equity fund. It receives a Bronze rating for the cheapest classes. Andrew Lyddon and Andrew Evans of Schroders' value team have managed the strategy since May 2018. Their deep value approach, which seeks to identify companies trading at significant discounts to their perceived fair values, starts with a series of valuation filters. Price relative to 10-year average earnings (cyclically adjusted price/earnings) is a key criterion, but they also look at other parameters, such as price/tangible assets.

large growth fund table

The financial sector continues to be the major player in this fund group. Its weight has increased significantly since our July review, from 19.9% to 21.3%. The presence of financial companies in the top 10 has also increased substantially compared to the previous month. In this latest review we find 3 financial companies: BNP Paribas, ASR Nederland and ING Groep.

Pharmaceutical companies still occupy, however, the top 3 positions with Sanofi, GlaxoSmithKline and Novartis.

Large Blend

There have been no major changes in the Large Blend category. Three sectors continue to dominate the portfolios: consumer defensive, healthcare and financials, each with a weight of around 15%. As for the top 10, the presence of healthcare companies has increased from 4 to 5. Roche Holding, Sanofi, Novo Nordisk and Novartis have been joined this month by AstraZeneca. Nestlé remains in first place, even increasing its average weight in the portfolios (from 2.89% to 2.99%).

large blend funds table

Large Growth: New Additions

This month we have added the Schroder European Special Situations to our list of Large Growth funds. The fund’s investment process is primarily focused on finding companies with long-term growth potential that the managers (Leon Howard-Spink and Paul Griffin) believe can be sustained for longer than the market anticipates. They search for quality - defined as businesses with strong positions in niche markets, pricing power, low capital intensity, or a focus on innovation - that will help a company to increase its returns on capital for a number of years. Up to 10% can be invested in "restructuring/turnaround" stories--businesses with low returns today that nonetheless have a kernel of quality, a potential to improve and thus become quality growth in future.

The Large Growth portfolio is perhaps the one that has undergone the most changes since the last review, not so much in terms of sector weights but in terms of the stocks present in the top 10. This month 3 new names are in and 3 are out: RELX, Infineon Technologies and adidas are in; SAP, Prosus and Dassault Systemes are out.

large growth fund table

 

 

 

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Fernando Luque

Fernando Luque  is Senior Financial Editor at Morningstar Spain