A US recession could never be described as good news for the European economy. But with unemployment at a 25-year low, consumers still spending and earnings growth strong, things are a lot better on the continent than they are across the Atlantic, says Rod Marsden, manager of the JO Hambro Continental European Fund. "The overall consumer picture is supported by healthy savings rates and by the fact that consumption has been far less financed by asset price inflation," he tells What Investment.
That's why the Brunel University economics graduate has begun raising his fund's exposure to financial stocks with strong balance sheets and a retail focus, says the Financial Times. Recent acquisitions include Zurich Financial Services, while he has also topped up holdings in ING and AXA. In all, 70% of the fund is invested in European blue chips, which Marsden believes are better value than cyclical small caps just now.
The fund is up 66% over the past three years against 47% for the FTSE Europe. It has been closed to new investment since March last year after it and another Marsden-run European fund reached their joint limit of £500m under management. The good news is it was re-opened to new investors in February, with the limit raised to £1.2bn. Given that both "have been strong performers for JO Hambro in the past these are funds we should look at", says Chelsea Financial Services managing director Darius McDermott in Money Marketing.
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JO Hambro Continental European top ten holdings
Name of holding, % of assets
France Telecom, 2.3%
ING Groep, 2.1%
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