Investment Strategies

Regional Equity Strategies

European Equities

FUND NAME Benchmark Base Currency 1 year % 3 years % pa 5 years % pa
JOHCM Continental European Fund A GBP 19.28 11.68 16.15
JOHCM European Select Values Fund B GBP 29.40 12.05 16.78
JOHCM European Concentrated Value Fund C EUR 10.61 N/A N/A
A: MSCI Europe ex UK NR Composite 12 Noon Adjusted* GBP 17.65 7.08 12.05
B: MSCI Europe NR Composite 12 Noon Adjusted GBP 17.78 6.58 11.29
C: MSCI Europe Adj (EUR) EUR 0.89 N/A N/A
*Funds changed benchmark 31/12/2012 to MSCI from FTSE

European equity markets still face a series of macroeconomic and political challenges. The UK’s likely departure from the European Union is a disruptive event, as there are substantial trade flows between the UK and its Continental European neighbours. Furthermore, the coherence of the European project will be tested by upcoming elections in France and Germany and by a referendum on constitutional issues in Italy.

JOHCM’s European Select Values (ESV) strategy outperformed its benchmark by over 800 basis points in the 2016 Financial Year. The strategy’s structural underweight position in financials played a significant role in this outperformance. This has been a long term characteristic of the strategy due to the difficulty in finding companies with visibility and sustainability of cash generation in this sector, particularly at a time when low interest rates and a flat yield curve have made life difficult for banks. ESV also benefited from good stock selection in the consumer and materials sectors, with notable stock performers including Dutch publisher Wolters Kluwer and Swiss agribusiness and takeover target Syngenta.

In March 2015, we launched an extension strategy, based on the ESV approach, named European Concentrated Value (ECV). Having added experienced resources to the team in early 2015, this strategy is run as a more concentrated version of its successful sister strategy and typically owns shares in larger companies. Performance has been similarly robust, with ECV outperforming the MSCI Europe Index significantly over the year. With ESV now closed to new investors having reached capacity, future client flows will be directed towards the extension strategy. Boasting an experienced fund management team and an excellent track record since its launch 18 months ago, this strategy offers significant commercial potential.

Pleasingly, the JOHCM Continental European Fund has generated six consecutive years of outperformance versus its benchmark since fund manager Paul Wild took sole responsibility for managing the strategy in late 2009. The fund marginally outperformed its benchmark in the 2016 Financial Year, with good stock selection in the financials, materials and telecommunications sectors cancelling out modestly negative sector allocation effects, principally being underweight the strong-performing consumer staples sector.