Williams currently runs the Baring Europe Select Trust, a similar vehicle he took control of in 2004 and which ranks first quartile among its Morningstar peers over the past three and five years.
In his new fund, which Williams will manage alongside Colin Riddles, the Baring small cap equities head will use top-down macroeconomic analysis combined with a comprehensive, bottom-up stock picking approach to hunt out the Continent’s best opportunities. As well as focusing on core Europe, he and his co-manager Riddles will invest in companies based in the UK. In each case, however, the pair will concentrate on firms they believe will offer the greatest upside.
Why now is the time for tiny Euro firms
Williams said Barings has planned the launch for the coming weeks, subject to regulatory approval, because he and Riddles feel the current environment is supportive of European smaller companies, despite investors remaining cautious on the region’s growth prospects.
“Exciting investment opportunities continue to be found in smaller companies,” Williams explained, backing up his use of bottom-up stock selection. “Recently, there has been an Improved sentiment towards European equities, and whilst we have seen gains in European and UK smaller companies, we believe there remain interesting stock opportunities for us to identify and we continue to be bullish towards smaller companies on a pan-European basis.”
The new offering from Barings will be structured as a Ucits fund domiciled in Ireland, and will be benchmarked against the MSCI Europe SmallCap Index.
Williams’ existing vehicle, Europe Select Trust, has over the three years to the end of August delivered 65.8% for investors, and easily outperformed its comparator HSBC European (ex UK) smaller companies TR Index, which rose by 37% over the same stretch.
Speaking to Portfolio Adviser, Williams said Barings had already seen some under researched, higher growth names deliver for its Select Trust, and this cemented his view that similar, smaller firms could do well in the firm’s new launch.
Williams pointed to German biotech name Morphosys, and said investors had been unwilling to recognise its progress during the dark days between 2008 and 2012, but the stock still delivered for the fund.
He added: ‘There are other things like it out there. Valuations [price them like] they are living hand to mouth and not innovative, but they may be world leaders in individual areas.’