European equity fund (excluding UK) that invests across the market capitalisation spectrum and aims to produce attractive capital returns for investors through time. The managers put detailed cashflow analysis at the core of the investment process and view value & growth as inextricably linked. The lack of research on companies at the smaller end of the market is an inefficiency that the fund looks to exploit and where the greatest growth potential tends to be found.
“Built on the fundamental belief in the importance of free cashflow, this portfolio has attractively valued cashflow, lower debt and higher sales growth than the market.”
Dale RobertsonPortfolio Manager
Aims to generate capital growth by investing in Continental European listed companies
Focus on finding companies, across the market cap spectrum, with higher free cashflow yields and faster sales growth than the market
Experienced team of two Edinburgh based fund managers
Dale joined Chelverton in 2017. He began his career as a chartered accountant at Arthur Andersen, moving to Edinburgh Fund Managers in 1995. He then managed European funds at SWIP before moving to Edinburgh Partners where he managed the EP European Opportunities Fund from 2003 – 2016.
6 years
28 years
Gareth joined Chelverton in 2017. He began his career in financial services in 1996 at Edinburgh Fund Managers. He then moved to ABN Amro where he was a long/short investor within Principal Strategies until 2009. Before joining Chelverton, Gareth was a partner at Willis Welby, a boutique research house.
6 years
27 years
European equity markets posted positive gains over the month of March. Company results during the month were generally supportive for share prices.
The fund also advanced over the month.
In terms of noteworthy contributors, Rheinmetall (Defence) was again up strongly during the month, having also been a strong contributor to the fund’s returns in February. Vallourec (Steel pipe products) enjoyed a good month in terms of share price appreciation, as it announced that ArcelorMittal had taken a 28% stake in the business. 4C (software) climbed following news that budget delays in the US, of significant relevance to the company, had been overcome. Elsewhere, Esker (Software) Deme (Dredging and Renewables Services), D’ieteren (Autoglass owner) and Amadeus Fire (Recruitment and Training services) all advanced over the month following positive results.
BE Semiconductor was weaker on profit taking plus concerns of delays to future orders. La Francaise de l’Energie (carbon neutral energy supplier) was down on the month, despite positive news regarding a significant future development project. Kering (luxury goods) was lower following disappointing results concerning short term growth at its main brand, Gucci. Fabasoft and Serviceware (both software) were down over the month on profit-taking following strong recent share price performances.
Holdings in Novartis and Signify were sold over the month, with the proceeds mainly being deployed in new investment ideas. GTT is a world leading supplier of membrane technology for the transportation and storage of LNG, with very high-quality returns and excellent long-term visibility for growth. Danieli is a leading supplier of modern technology furnaces which deliver significantly lower CO2 emissions for steel producers. We also took some profits in Rheinmetall, and added a position in Mildef, a smaller Defence sector company. Finally, we initiated a position in Kinnevik, a holding company which specialises in growth investments. Following the significant derating of high growth stocks from the trough of the interest rate cycle, we purchased the shares at a 40% discount to (sharply downgraded) NAV.
It may still be too early to call the bottom of the underperformance of smaller companies versus their larger counterparts in Europe, which is in its 19th month. However, the broadly supportive results season just passed is starting to lend credibility to our view that smaller companies have been unfairly overlooked for some time now, leading to significant investment opportunities. The fund enters the second quarter of the year with a free cashflow yield of 6.1%, some 50% ahead of the broader market, with expected sales growth of 11.9% over the coming years, 1.8x the rate expected by the market, and zero financial debt for the fund’s holdings in aggregate.
1Amadeus FiRe | 2.8 |
2Vallourec | 2.7 |
3OX2 | 2.6 |
4Arcadis | 2.5 |
5Rheinmetall | 2.4 |
6DEME | 2.3 |
7Esker | 2.3 |
8D'Ieteren | 2.3 |
9Fabsoft | 2.3 |
10ASM International | 2.3 |
11BE Semiconductor Industries | 2.3 |
12Visiativ | 2.2 |
13Technogym | 2.1 |
14Kinnevik | 2.1 |
15Brunel | 2.1 |
16Roche | 2.1 |
17TGS-NOPEC | 2.1 |
18Valmet | 2.0 |
19EuroGroup Laminations | 2.0 |
20Serviceware | 2.0 |
Information Technology | 34.9 | |
Industrials | 31.3 | |
Energy | 11.9 | |
Consumer Discretionary | 9.9 | |
Financials | 3.4 | |
Health Care | 3.4 | |
Materials | 3.2 | |
Basic Materials | 0.0 | |
Consumer Goods | 0.0 | |
Telecommunications | 0.0 | |
Utilities | 0.0 | |
Technology | 0.0 | |
Consumer Staples | 0.0 | |
Real Estate | 0.0 | |
Cash | 2.0 |
France | 20.6 | |
Sweden | 14.9 | |
Germany | 13.1 | |
Italy | 11.4 | |
Netherlands | 10.1 | |
Norway | 7.2 | |
Belgium | 5.8 | |
Finland | 4.7 | |
Austria | 4.5 | |
Switzerland | 3.2 | |
Ireland | 1.5 | |
Spain | 1.0 | |
Cash | 2.0 |
Benchmark | N/A |
IA Sector | IA Europe ex UK |
Morningstar category | EAA Fund Europe ex-UK Equity |
Launch date | 06 March 2018 |
Fund type | UK Domiciled OEIC |
Base currency | GBP |
Dividend frequency | Biannual |
Country of registration | UK |
The objective of the fund is to achieve long-term capital growth. The fund will invest primarily in a portfolio of fully listed companies that trade on Continental European stock exchanges.
Dealing line | 0345 305 4217 |
Administrator email | |
Dealing fax | 0845 280 0188 |
Dealing frequency | Daily |
Price frequency | Daily |
Settlement terms | T+3 |
Dealing cut-off time | 12 noon (UK Time) |
Valuation point | 12 Noon |
Regular savings | Yes |
ISA eligible | Yes |
SIPP eligible | Yes |
EMX dealing codes | CHEVTN |
Calastone dealing | Yes |
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