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French small caps will be big winners from Macron

Citywire AAA-rated fund manager Caroline Gauthier believes business-friendly agenda of president Macron will be good for France's smaller companies.

 
French small caps will be big winners from Macron

French smaller companies will be the big winners of the government of newly-elected President Emmanuel Macron, according to Caroline Gauthier.

Citywire AAA-rated Gauthier, who runs the Amundi Fds Equity Euroland Small Cap fund, said she had slightly reduced her allocation to France ahead of the elections to manage risk. However, with the result assured, she was now on a more positive footing.

‘We welcome the election of a pro-business president. It will be positive for small caps because there will be a fall in the corporate tax rate.

'President Macron should logically be more positive for small and mid-cap companies which pay a higher proportion of their tax in France. Domestic names are well positioned to benefit.

'Macron is a pro-business president who is also pro Europe. The job laws will be his first action and he will introduce more flexibility in the job market also,' Gauthier said.

Gauthier currently has 24% of the fund dedicated to France, which is up from 20.6% at the end of March, and is an overweight against the stock market benchmark of 16%.

Automation

On a sector basis, Gauthier has 10.4% of the fund allocated to IT. Robotics, optimisation software and visualisation solutions are among the key trends she is interested in. She also has nearly 2% in Outotech, which provides technological services for the metal processing industry.

'We are invested in semiconductors because we believe the sector is benefiting from very strong momentum in terms of EPS [earnings per share] given demand. Prices are on the rise, fundamentals are very good. We have seen some very good performance and we chose to take profit on some names,’ Gauthier said.

'Automation is a mega-trend which is linked to the productivity improvements, and it is key both in the developed economies and in emerging markets. Companies with automation solutions will see improved momentum in the next year and that is what we are looking for.’

Over three years to the end of May 2017 the Amundi Fds Equity Euroland Small Cap fund returned 37.2% in euro terms. This compares to a rise of 43.5% by its Citywire assigned benchmark, the MSCI EMU Small Cap TR EUR.

2 comments so far. Why not have your say?

joseph o neill

Jun 20, 2017 at 10:18

A cheap tracker it is then!!

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Law Man

Jun 20, 2017 at 16:58

With quick research I found:

1. For France only, and index tracker ISFR; but it is larger caps

2. For Euro area small companies JESC IT which has performed much better than the Amundi fund.

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