Square Mile Fund Review | August 2020

The Threadneedle European Select fund, which is held in our client portfolios, has performed relatively well recently. It may therefore be of interest to provide some background on the fund, why it is appealing and provide some context to its recent good performance.

The fund is run by two managers which we hold in high regard, David Dudding, who has lengthy experience investing in European markets and Benjamin Moore, who was recently appointed co-manager, but who has a background in investing in small and mid-sized European firms. These managers seek to invest in a very specific type of company which they believe to be well established, high quality and growing businesses that have some form of advantage against their competitors and preferably have high barriers to entry to hinder the threat of competitors eating into their profits. The fund is attractive in our view because it should not give investors too many surprises as the managers have consistently applied the investment process for several years which has proven very successful over time.

More recently, the fund is up by nearly 9% this year, compared to its benchmark which is down by around 1%. The stock picking element in the portfolio has worked well, particularly in the industrials and consumer areas. Furthermore, the avoidance of some of the poorly performing financials and energy related sectors has also been beneficial.

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