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GAM Star Continental European Equity

Elite Rated by FundCalibre

This fund invests in large companies, with the team preferring those they believe will grow faster than the index. The team look to buy stocks at the point where they are either out-of-favour or where growth prospects are believed not to be fully reflected in the stock price. The fund has a low stock turnover and is not constrained to an index.

Company Description

Founded in 1983, Global Asset Management (GAM) operates in more than 10 countries worldwide, with offices in Europe, North America and Asia. Acquired in 1999 by UBS and then by Julius Baer in 2005, it separated from the latter in 2009 to form an independent, publicly-listed asset management group. GAM manages more than 60 investment strategies across a range of asset types, including fixed income, absolute return and funds of funds.

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Fund Manager

Niall Gallagher has been managing this fund since December 2009. Having started his career as an economist at the Bank of England, he managed continental European equities for BlackRock and then T. Rowe Price, before joining GAM in 2009. Niall holds an economics degree and an MSc in Economics and Finance, as well as being a CFA charterholder. He also manages the GAM Star European Equity fund, which follows a similar mandate but also invests in UK stocks, whereas this fund does not.

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For the record, my being Irish is not why we are so heavily overweight the index in Ireland. These stocks met our criteria of being well-managed and having low debt levels, and they did come out of the crisis stronger than before – perhaps a reflection of being domiciled in God’s own country

Niall Gallagher - Fund Manager

The Investment Process

Meetings with industry experts and company management are of high priority when selecting a stock. The team extensively analyse industry drivers, the company and the management from data across many years. They favour diversification and Niall has flexibility to invest in value stocks if he feels it is appropriate to current markets. A large exposure to specific themes is avoided, and companies with strong cash generation and growing profits are favoured.

Risk

The volatility of the fund is slightly below that of the sector average, due to a bias towards larger companies. However, due to the unconstrained and concentrated nature of the portfolio (30-50 stocks), the manager may deviate from the benchmark, which can increase risk. Investors should also be aware of the currency risk.

Our Opinion

Niall’s pragmatic approach and vast experience in European equities stands him in good stead for managing this fund. The depth of analysis assures investors that due diligence has been performed on investments. Through patience in the process and conviction in their decisions, the team’s approach has reaped rewards.

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