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Threadneedle European Select

Elite Rated by FundCalibre

This fund aims to provide capital growth through investment in a portfolio of predominantly large European companies. The manager has developed a distinctive process, which focuses on industry structure and a company’s competitive position. Firms that can defend their margins and industries with barriers to entry are preferred. The fund has shown itself to be especially strong in down markets.

Company Description

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies, which are owned by the US financial services firm, Ameriprise Financial. Its focus is on equities and fixed income, but the company also manages cash and property assets. It has an international presence spanning 18 countries across UK, Europe, US and Asia.

Factsheet_columbia_threadneedle_logo

Fund Manager

David Dudding joined Threadneedle in 1999. In 2002 he started managing the European Smaller Companies fund and it quadrupled in value under his 10-year tenure, easily beating its index. In 2012, he gave it up to focus on the European Select fund, which he took over in July 2008.

Factsheet_dave-dudding-sitting

We try to find companies that have the ability to raise prices. Typically consumer good companies can do that because they have very strong brands.

David Dudding - Fund Manager

The Investment Process

David believes the market underestimates the ability of some companies to sustain high returns. His team identify these high quality companies, which can raise prices in any economic environment. David avoids industries with regulatory uncertainty, such as the banks or telecom companies. He will sometimes invest in stocks without pricing power, but he will only invest in the lowest-cost producer in the industry. The process uses stock selection and the team wastes very little time looking at macroeconomic factors. The fund is concentrated, with almost 50% in its top 10 holdings.

Risk

The fund has historically been less volatile than its peers. The high quality companies in which it invests tend to be more defensive and resilient than the average stock in the index. When investing in a company without pricing power, David will never allocate more than 2.5% of the fund to it.

Our Opinion

Threadneedle European Select has an excellent patient process, which has repeatedly proven itself. David has a fantastic understanding of the companies in which he invests. It has delivered some of the strongest returns in the sector while simultaneously being one of the least volatile funds. This fund represents a core European holding.

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