Report Release Date: 31 Aug 2010
Analyst: Thomas Lancereau
Morningstar Opinion
We consider this European equity fund to be one of the best in its category.
This fund's manager is the highly experienced Laurent Dobler. As is the case for all Comgest funds, a highly collaborative approach is taken, where the manager is supported by a close-knit team comprising six other managers/analysts dedicated to European equities. The team brings together a total of 17 years' management experience, with an average of nine years at Comgest, making it one of the most stable companies we know. This management company offers a favourable investment culture, which seems more motivated by investor returns than by short-term asset inflows.
The fund's investment process is typical of the group's approach, which is strongly oriented toward high-quality growth companies. The team focuses exclusively on highly profitable businesses that are able to increase earnings independently of the economic cycle. These generally enjoy a leading market share, quality management, and a healthy balance sheet with little debt. Equities belonging to more cyclical sectors or those within the financial sector are thus deliberately excluded from the managers' initial investment universe. This approach results in a highly focused, concentrated portfolio of 20 to 35 stocks, which bears little resemblance to indexes or competing funds. Stock selection results in bold bets in specific sectors and indeed, historically, the team has found numerous investment opportunities in the health-care and business services sectors.
The managers have a long investment horizon (the turnover rate is around 30% per year) and are not afraid to go against market trends. They tend not to be swayed by fashions and remain faithful to the group's approach, not aiming for outstanding performance in any given market environment. Thus, despite the spectacular market recovery observed in 2009, the managers did not invest in financial or cyclical stocks, hence the fund's predictably poor performance that year. For the year to date through the end of July 2010, the fund's results are slightly behind due to the strong recovery seen in July.
We nonetheless believe that this strategy's merits should be judged with a long-term perspective: The fund ranks among the top 30% in its category across three-, five-, and 10-year timeframes. It has also demonstrated remarkable resistance in bearish phases and is significantly less volatile than its peers. We believe that investors can sleep soundly when using this as a core fund in their portfolio.
The factors that have led to this fund's long-term success-- consistency and stability--are the same factors that lead us to comfortably award the fund our highest qualitative rating in the category: The fund maintains its Elite rating.
*The above returns are in CHF terms.
To learn more about the fund, please click here.
To read the summary report, please click here.
