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Germany and Greece help Jarvis beat the street

26th April 2007 Print
A combination of astute stock picking and overweight positions in Greece and Germany have helped F&C's European Dynamic fund, managed by Peter Jarvis , deliver a storming 22.6 per cent rise over the last six months, almost double that of the FTSE World Europe ex UK index, which returned just 13.4 per cent over the same period.

This fund ranks in the top percentile over six months and top quartile (up 77.7 per cent) over the last five years.

"One of our favoured markets is Germany. The economy is moving from strength to strength and corporate restructuring is creating more and more shareholder value. We have taken advantage of the restructuring play at Daimler Chrysler and Siemens and more recently Munich Re.

"Greece, whose financial sector has been growing strongly compared to its equivalents in other European Union countries has, we believe, been trading on more attractive valuations than its European neighbours. We like National Bank of Greece in this space and although elsewhere we remain sceptical of the telecommunications sector, our investment in Greece's Forthnet continues to deliver results."

However, Jarvis who has co-managed F&C European Dynamic since launch in October 2001, is quick to point out that first and foremost the fund is run as a pure stock picking fund.

"Despite the fact that the fund has a low tracking error, its composition bears very little reflection to the FTSE World Europe ex UK index," he said.

Although Jarvis is not restricted to investing anywhere along the company size spectrum, like most of the sector he currently favours medium sized companies.

"Mid cap stocks have done well across the sector and we have found great opportunities among tech names, in particular Swedish company Axis Communications. Axis is a world leader in the area of digital close circuit TV solutions and recently won a contract to supply the Moscow subway with state of the art equipment. Irish company Datalex has also driven returns in the fund. The company provides the underlying technology for online booking systems for airlines such as United Airlines, taking a fee from bookings made. With the ability to use the same software for any airline, their model is very cost efficient. From the airlines' perspective this is also a cheaper way to generate business than through more costly travel agent booking systems," he says.

In addition to telecommunications, Jarvis remains cautious on the outlook for Spain.

"We are currently limiting exposure to Spain in our portfolios, where the market is facing what closely resembles an imminent collapse of the real estate bubble. Inflation is another concern and there are fears that the recent boom in consumer lending, could come back to haunt the market," he concluded.