A fund seeking to uncover Europe’s special situations

Kate Marshall | Thu 16 November 2017

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• We view Richard Pease as one of the most experienced investors in the European sector
• He focuses on finding unique companies with great prospects, rather than the outlook for the wider economy
• Superior stock-picking has driven long-term performance

Our view

Richard Pease has built a formidable reputation investing in European shares. We like his unique approach to investing in European markets: he is willing to look for opportunities off the beaten track, which may have been overlooked or misunderstood by other investors.

This approach means the manager needs to uncover many stones to find companies he feels have the best growth potential. He has therefore built a strong team around him and has the support of excellent analyst resource. We believe each team member provides their own complementary skills and perspectives to running the fund.

The manager has used the same strategy to great effect for many years and our analysis suggests he has one of the best records of picking strong-performing stocks in the European sector. He currently applies his trade to the FP CRUX European Special Situations Fund, on which he has built an exceptional track record, although this is not a guide to how the fund will perform in future.

We view the fund as a superior option for investors seeking access to Europe's stock markets and it currently features on the Wealth 150+ list of our favourite funds.

What type of company does Richard Pease invest in?

From Emmanuel Macron’s presidential victory in France to Angela Merkel winning a fourth term as German chancellor, Europe has seen a string of important elections throughout 2017. While this has caused some uncertainty, European stock markets have generally performed well.

Richard Pease tends to avoid looking at broader economic and political issues and prefers to concentrate on what individual companies are getting up to. He favours companies that are based in Europe, but generate profits from across the globe, which gives them the ability to prosper regardless of the continent’s economic and political backdrop.

The manager also favours companies that offer niche products and services, and dominate their area of the market. These often generate recurring revenues, which means they produce stable and predictable profits that are likely to continue into the future.

Richard Pease runs a relatively concentrated portfolio of around 60 investments, so each can have a significant impact on returns. He also invests flexibly across companies of all sizes, including small and medium-sized companies. We feel this approach has the potential to add value over prolonged periods, although it is a higher-risk strategy.

Performance review

Richard Pease’s disciplined investment approach has worked well over the long term, although as an actively-managed fund it will inevitably experience periods of underperformance. Towards the end of 2016, for instance, the fund’s lack of exposure to some of the stronger-performing areas of the market, such as oil & gas companies and Southern European banks, held back returns.

We remain confident in the manager’s ability to deliver attractive returns for investors over the long run. Richard Pease has delivered considerable value for investors since the fund’s launch in October 2009. Over this time the fund has grown 187.4% compared with 105.0% for its benchmark, the FTSE World Europe ex UK Index, although please remember this is not a guide to how the fund will perform in future.

Past performance is not a guide to future returns. Source: Lipper IM 31/10/17

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.