7th January 2011

Lifestyle portfolio update: Carne repositions European equity holdings

Following the acquisition of Thames River Capital by F&C Investments, I am in a position to draw on the additional research and analysis capabilities of the Thames River Multi-Capital team. Between us, the broader team has extensive experience in analysing fund managers and our approaches to investing in varying economic and stock market conditions, spanning both bull and bear markets. 

We have recently moved to reposition our European equity holdings across the Lifestyle range by establishing positions in BlackRock European Dynamic and the iShares MSCI Europe ex UK ETF*. The purchases were funded by the sale of holdings in Cazenove European, JOHCM Continental European and Neptune European Opportunities. This is only a change to our European holdings and doesn't alter our current asset allocation to Europe, which remains in line with the benchmark.

Why the change?

We have held Cazenove European for some time, believing that in the hands of its talented manager, Chris Rice, this business-cycle strategy would best navigate the fast changing European equity landscape. The strategy has been successful, but has started to lag the market of late and, whilst we continue to believe in the manager’s ability, we feel that an alternative approach is in the best interests of our investors for now.

As ever, we aim to blend our individual holdings across the Lifestyle range and particularly so within each defined asset class. With this in mind, we have also exited our positions in Neptune European Opportunities and JOHCM Continental European - both remain good funds but do not work as well as the combination of BlackRock European Dynamic/iShares MSCI Europe ex UK. 

As the name suggests, BlackRock European Dynamic is managed in a ‘dynamic’ manner, with fund manager Alister Hibbert investing in between 35-65 companies of all sizes. His approach blends bottom-up company analysis with top-down macro assessment and should, in our view, be able to take advantage of the opportunities that exist in Europe against what will likely remain a challenging backdrop from an economic perspective.

Given the BlackRock fund’s dynamic nature, we have also introduced a complementary ‘core’ position in iShares MSCI Europe ex UK – an ETF giving us low cost and efficient broad-based exposure to Europe’s equity markets. 

Paul Carne
Associate, Thames River Multi-Capital

6th January 2011

Investments