Mid-cap stock successes help propel F&C European Dynamic into top decile

Stock picking success stories in European mid caps have helped propel the F&C European Dynamic Fund in top the top decile of the IMA European ex-UK sector over one year.

Peter Jarvis, who has managed the fund with Davina Curling since launch in October 2001, said European companies continued to benefit from the robust regional economy, a fact evidenced by a strong start to the current earnings season.
"While the fund invests in companies of all sizes we have an emphasis on medium sized firms, particularly those characterised by visible earnings and attractive growth prospects. With a supportive economic backdrop and strong corporate performance we believe that Europe remains a potentially lucrative hunting ground for the dedicated stock picker," he said.

However, Jarvis cautions that ongoing concerns surrounding the likely direction of the US economy and global interest rate rises could be a portent of tougher times ahead.

"With rising interest rates and slower global growth, individual stock selection is becoming increasingly important," said Jarvis.

The £48m fund which invests in between 40 and 70 individual companies is currently overweight towards Greece. Jarvis said that Greece had proved to be one of the portfolio's winning destinations.

"Not for the sun or sand but for the investment opportunities on offer as its economy aligns itself with the rest of the European Union," he said. "We bought Greek ferry operator Blue Star Maritime at 2.2 Euros on 2nd March 2006. The company has since seen its share price increase to 3.34 Euros today as it continues to benefit from the de-regulation of the inter-island ferry industry. We also hold broadband telecoms operator Forthnet.

"Forthnet is number two in the Greek telecoms market to OTE. It has been able to increase its market share in the largely untapped Greek market. Over 12 months, its share price has jumped from 6.174 Euros to 11.94 Euros today," added Jarvis. F&C European Dynamic Fund invests predominantly on a medium to long term view but the managers also look to take advantage of market volatility through short-term tactical trading opportunities.