SWIP Pan European Equities team recognised with S&P ‘A’ ratings

Rigorous team-based research has reaped rewards for the Scottish Widows Investment Partnership (SWIP) Pan European Equities team.

The SWIP Pan European Equity fund and SWIP Pan European Smaller Companies fund have both been awarded an ‘A’ rating from Standard & Poor’s.

The SWIP Pan European Equity fund, managed by Head of European Equities Nigel Bolton, has achieved impressive performance over the past 12 months with returns of 27.18% against a median return for the sector of 22.90%. The fund is also top quartile over one, two and three year periods.

This success is mirrored in the small cap sector with SWIP’s Pan European Smaller Companies fund outperforming the benchmark with one year returns of 42.56% against a sector median of 32.97%. The fund, which has been managed by Rory Hammerson since January 2005, has been integrated with SWIP’s rigorous research process to ensure that each stock held meets the stringent requirements of the team.

Nigel Bolton, Head of European Equities at SWIP and manager of the SWIP Pan European Equity fund, commented:

“The strong performance across SWIP’s large and small cap pan-European funds is testament to our strong stock-picking ability, which leads to the creation of conviction portfolios which have a significant bias away from the benchmark. We do not see any value for investors in running active portfolios that mirror the benchmark – each stock we hold is expected to make a difference to the portfolio. This is how we add value for investors and the rewards are evident in the strong performance across the team.

“All our fund managers are also analysts and our research stands out for its financial analysis which we forecast over a five year period to identify any cyclical trends. We have put rigorous research processes in place over the past few years to ensure that we find promising opportunities from the universe of over 3,000 potential stocks in this sector.”

A resurgent European economy, improving earnings growth potential, energetic merger and takeover activity and positive investor sentiment all bode well for the pan European investment market. SWIP sees particular value in the German market and both the large and small cap funds are currently overweight in German stocks. German business sentiment is at its highest level in 15 years and corporate cash-flow remains healthy as management focuses on shareholder returns, providing some good opportunities for investment in European equities over the long term.

Rory Hammerson, manager of the SWIP Pan European Smaller Companies fund commented:

“There is a vast range of stocks available in the European small cap market which provides a greater challenge for analysts. There has been a surge of new companies seeking listings over the last year, too, so the choice is expanding as economic prospects improve in Europe. We still see value in small cap stocks but we also have a strong view on the earnings of mid-caps stocks and have identified some interesting opportunities.”