Launched in May 1990 the Fund aims to achieve long-term growth of capital primarily through investment in Europe excluding the UK. The manager will invest where there are good prospects for above average earnings growth and also in those European companies which can best take advantage of global economic opportunities.

The fund

  • Targets growing companies trading on attractive valuations.

  • Utilises a high-conviction investment approach – c.30-40 holdings.

  • Can zero weight unfavoured sectors.

Meet the Sanlam Growth Equities team

Chris Ford
Chris Ford
Fund Manager
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Tim Day
Tim Day
Fund Manager
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Giles Worthington
Giles Worthington
Fund Manager
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Why invest in the fund

  • High active share with a growth style bias
  • Freedom to back best ideas – no ‘house view’. If we don’t like a specific sector or individual country within Europe excluding the UK we don’t have to own it
  • Exposure to secular growth through a diversified blend of high-conviction holdings with attractive thematic attributes
  • Highly pragmatic investment approach – emphasis is on cheap thematic beneficiaries, regional European champions and genuine world leaders that just happen to be domiciled in Europe
  • Managed by an institutional-quality team with proven experience in thematic investment.

We believe growing companies exposed to longer-term secular growth drivers and which trade at a discount to intrinsic value will outperform.

Our approach works as stocks exhibiting underappreciated or undervalued growth tend to re-rate (in terms of their valuation) over time. Valuation re-ratings do not depend on a strong equity market; a re-rating represents a stock achieving a comparable valuation vs its competitors or peers, given the rates of growth on offer.

Our thematic approach means that we are focusing on businesses which are in a growth or expansion phase, which will boost earnings, or those which benefit from strong competitive positions or moats within their own industry. We also understand that the impact and persistence of investment themes is likely to vary over time, which we reflect in our portfolio positioning.

Our thematic approach means that we are focusing on businesses which are in a growth or expansion

Giles Worthington, Fund Manager

Fund Commentary

November 2021

Market/macro backdrop
November 2021 saw weakness in European equities, with the MSCI Europe ex UK index producing a sterling total return of -1.67% (source: Morningstar). Like most global markets, European bourses initially started the month positively, but sentiment deteriorated later in the month due to the emergence of a new and highly contagious variant of the coronavirus.
At the sector level, the best performing areas of the market in November were communication services (which is a relatively small sector in the MSCI Europe ex UK) and materials. Energy and financials underperformed.

Performance vs sector/benchmark
The Fund produced a performance of 1.30% in November 2021 (A Inc class – source Morningstar).
The MSCI Europe ex UK index produced a sterling total return of -1.67% (source: MSCI, Bloomberg).


Past performance is not a guide to future performance. Total return, NAV to NAV basis, net of charges, assumes net income reinvested.


Positive and negative attributors at stock level 
Positive:               Sika, Ferrari, Siemens Healthineers
Negative:              Richemont (not held), ING, Roche (not held)

Significant portfolio changes - buy/sells 
In November we exited our position in Italian utility company Enel. Like most European utility companies, Enel has faced soaring wholesale gas prices (over 90% of Italy’s gas is imported) and there have been moves from European governments to mitigate the price impact for consumers, including profit clawback measures in markets such as Spain, where Enel owns Endesa.

We started a new position in ABB which is a global leader in electrical equipment and automation products. Whilst revenue has been constrained due to global supply chain issues, the company has enjoyed strong and expanding gross margins as its pricing power has allowed it to pass on inflation in input costs.

Corporate/team highlights
It is pleasing to report that a number of our core long-term positions delivered encouraging performance – Sika, Ferrari and Siemens Healthineers all posted double-digit percentage returns in GBP terms despite the challenging market backdrop. More generally, it was pleasing to see the Fund post a positive total return in an environment where wider European equity markets struggled. Over the past year, the Fund has outperformed the MSCI Europe ex UK by a significant margin.

Outlook
At the moment, it is simply too early to judge what the longer-term economic impact of the new Covid-19 variant may be but given the export-led nature of the European economy further disruption to global trade and supply lines is clearly not helpful.
At the consumer level, a number of governments are struggling to get their electorates to take Covid-19 vaccinations and indeed the Austrian government has now decided that vaccines will be mandatory, with unvaccinated citizens being required to self-isolate in the short term and ultimately facing the prospect of large fines once the legislation is enacted. The incoming German Chancellor Olaf Scholz has also reportedly given support to mandatory Covid vaccinations. Whether these moves will prove successful in reducing vaccine hesitancy in Europe more broadly remains to be seen.

We are delighted to have added significant value to the portfolio through our selection decisions in recent months but we will be monitoring events very closely over the new weeks, particularly if the new variant forces European government to tighten existing restrictions or impose new ones.  In terms of underlying holdings, we will continue to focus the Fund on our preferred blend of global leaders that just happen to be based in Europe (e.g. LVMH, Kering, Ferrari), regional champions (e.g. Cap Gemini, Heineken) and attractively valued thematic beneficiaries (e.g. Orpea).

Explore the details
The fund provides exposure to underappreciated growth in Europe ex UK within a thematic framework.

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Fund Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. A table with five years’ performance is available in the fund factsheets.

The Fund has holdings which are denominated in currencies other than sterling and may be affected by movements in exchange rates. Consequently the value of an investment may rise or fall in line with the exchange rates.

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The value of investments and any income from them can fall and you may get back less than you invested.