Wealth Manager - the site for professional investment managers

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

How Premier's Hambidge exploited Europe to outwit the benchmark

How Premier's Hambidge exploited Europe to outwit the benchmark

While many investors have shied away from Europe, Premier’s David Hambidge has seen success from funds tapping the region’s smaller companies market.

Hambidge, who co-manages the Premier Multi-Asset Growth fund alongside Ian Rees and Simon Evan-Cook, points out that while valuations across European markets are very low, some of ‘nuggets’ of good news are in the region’s smaller companies space.

‘If you don’t like Europe you’re definitely not going to be buying European smaller companies and actually that’s where some of the nuggets are. We love smaller companies,’ he said.

He singled out the Threadneedle European Smaller Companies as one he likes in that space.

‘It’s got the best team, it’s a very small team, pan-European and very off-piste,’ he explained.

The fund has been run by Citywire Selection David Dudding and its stellar performance has helped power the Premier Multi-Asset Growth fund to a 16.43% return this year, compared to 8.76% in the LCI UK Balanced & International Equity benchmark.

Since the fund range offered in the European Smaller Companies sector is still small, Hambidge describes most of his European holdings as ‘conventional’, and points to Citywire AAA-rated Alistair Hibbert’s BlackRock European funds as a good call this year.

Hambidge sold out of the Schroder European Alpha Plus ‘as a happy investor’ owing to slight capacity issues and instead bought in to the Baillie Gifford European fund which Hambidge describes as ‘below most investors’ radars’.

‘We have had a decent exposure to Europe for the 12 months or so and for value investors that can be a bit frustrating. I’d suggest that part of that value has now been realised, really since Draghi came and underpinned the market through bond purchases,’ he said.

‘We prefer Europe as a place to invest as buyer of funds rather than direct equities,’ he explained. ‘We believe it is far easier to outperform in a less efficient market than a more efficient market. Europe is made up of all those different cultures and the ability of a manager to add value is much greater than with the US which is really over-analysed.’

Insurance

With the growth in natural disasters in recent years, many investors have begun taking notice of the insurance sector, and Hambidge still regards this space as an uncrowded trade. He's chosen the Polar Capital Global Insurance fund as the best way to access the sector.

‘It’s an uncrowded trade and valuations are attractive,’ Hambidge  said. ‘I can’t suggest there are any positives to be gained from events like Hurricane Sandy but from a financial point of view, when you make a claim your premium goes up. It’s unclear how many claims there will be but what is absolutely cast iron in our view is that the premiums will be going up.’

Infrastructure

On Hambidge’s watchlist for 2013 is the infrastructure space, a theme he says looks ‘particularly compelling’.

‘It’s an area that we think is one where there is going to be ongoing demand for the them. Prices don’t seem to be overcooked in the slightest – it’s not a mega-cheap area but prices don’t seem overcooked.’

Hedging yen exposure

‘We’ve hedged virtually all our yen exposure and that’s one thing that’s definitely worked this year,’ Hambidge said.

‘The fact of the matter is what Japan really needs, the catalyst for a sustained equity rally is a weakening of the yen… you have to see a continuation of that trend for it to have a positive impact on the stock market.’

As for most with exposure to Japan, the country has been something of a drag on performance with even the market leading GLG and Schroders Japan funds lagging.

‘Neither Schroders nor GLG have had a particularly great year,’ he said.

‘They had a value bias and Japanese large cap value has had one of its fairly rare period where it performs quite badly. We have quite a lot of faith in the GLG team and we are quite happy to maintain our position.’  

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

David Hambidge
David Hambidge
26/108 in Mixed Assets - Aggressive (Performance over 3 years) Average Total Return: 41.00%
Ian Rees
Ian Rees
27/108 in Mixed Assets - Aggressive (Performance over 3 years) Average Total Return: 40.86%
Simon Evan-Cook
Simon Evan-Cook
22/108 in Mixed Assets - Aggressive (Performance over 3 years) Average Total Return: 42.65%
Alister Hibbert
Alister Hibbert
17/75 in Equity - Europe Excluding UK (Performance over 3 years) Average Total Return: 62.11%
Citywire TV
Citywire TV
Play JPM’s Negyal: Back divis to temper EM volatility

JPM’s Negyal: Back divis to temper EM volatility

Omar Negyal, co-manager of the JPMorgan Global Emerging Markets Income trust, says a dividend approach to emerging markets reduces the volatility of investing in the asset class.

Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Your Business: Cover Star Club

Profile: 'new normal' now is as dangerous as when it was applied to tech

Profile: 'new normal' now is as dangerous as when it was applied to tech

7IM's CIO Chris Darbyshire says he has been re-energised by his new role, but has little time for 'new normal' doom-mongers

Wealth Manager on Twitter