SWIP’s European equity team celebrates strong three year performance

The Scottish Widows Investment Partnership (SWIP) European equity team has produced impressive performance over three years, with all large cap funds outperforming over one, two and three years.

S&P A-rated Nigel Bolton has managed the SWIP Pan European Equity fund for three years and has achieved first quartile performance over this period, with annualised returns of 17.86% against the European Including UK median of 16.95%. Scottish Widows European Select Growth, Scottish Widows European Growth and Scottish Widows Euroland are also top quartile over two and three years.

In addition, the SWIP European Real Estate Fund was the fifth top performing investment fund in 2006 across all sectors. It continues to see strong performance, with one year returns of 38.59% and it has also broken through the £100m barrier.

SWIP’s European equity success is mirrored in the smaller companies sector. Rory Hammerson has managed the SWIP Pan-European Smaller Companies fund since January 2005, achieving first quartile performance over the two years with annualised returns of 34.78%. The S&P A-rated and Morningstar 5 star-rated fund benefits from SWIP’s rigorous research processes to ensure that each stock held meets the stringent requirements of the team.

Nigel Bolton, Head of European Equities at SWIP, commented: “The strong performance across SWIP’s large and small cap pan-European funds is testament to our strong stock-picking ability and the strong team we have built over the past three years. This has led 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.

Each of SWIP’s 12-strong team of European equity fund managers is also responsible for generating research ideas for the range of retail and institutional portfolios. SWIP’s financial analysis is forecast over a five year period to identify any cyclical trends and to identify strong conviction stocks from the universe of over 3,000 potential stocks in the European equity market.

SWIP’s outlook for the European market remains positive, with expectations for growth in 2007 particularly from the German market.

Commenting on the outlook for Europe, Bolton adds: “I’ve never seen Europe looking as strong. There has been a sea-change in Europe in terms of the quality of companies and, in particular, the quality of management that is in place, particularly in the small cap sector. I believe that this is one of the reasons for the strong performance of this sector in 2006. Looking ahead, we are expecting more volatility amid concern over potential interest rate rises but we also believe there are strong opportunities within the European market.

“We see particular value in Germany and feel that it currently has the momentum to take it from the sick man of Europe to the main driver of Europe. Germany is showing strong growth and the construction sector is really driving forwards. I believe we’re seeing the start of a three to four year cycle starting now which will see the German market gain confidence.”