The European Select fund will launch on 6 March and be managed by Dale Robertson and Gareth Rudd, who joined Chelverton in October 2017 to head the firm’s new Edinburgh office.
The launch sees the reunion of Robertson and Rudd who worked together in the ’90s at Edinburgh Fund Managers and bring more than 40 years’ combined experience in the Europe ex UK sector.
Having received Financial Conduct Authority authorisation on Monday, the fund will invest in European companies from across the market cap spectrum using a four-stage cashflow-based valuation process.
It will have a small and mid-cap bias, with 25% of the portfolio targeting companies under €2bn, 22% between €2bn and €5bn and 53% in excess of €5bn.
The duo is aiming for the portfolio to comprise 30 to 50 stocks from a universe of 1,800. The fund will have an annual management fee of 0.75% and an ongoing charges figure of 1%.
Robertson explained with the era of free money and low rates set to end, Chelverton is targeting the middle ground between pure growth and deep value. It claims the fund offers a ‘modern value’ style which addresses the flaws of traditional value.
He told PA: “Deep value managers have had a very difficult time and to me don’t appear to be addressing the fact that the pace of technological disruption is increasing. You have a number of large sectors and industries that are being changed forever by technology and people are holding those companies thinking they are going to come back into favour and I don’t think they will.
“To me there is a dichotomy and there is a gap for an offering like ours and we have labelled it ‘modern value’ investing. We want to take the best attributes of the traditional value investing approach and address some of the shortcomings of a traditional value investing approach.”
Robertson said it was vital be able to address technological disruption because a traditional value approach just buys the out of favour companies and hopes they will turn around.
“We absolutely can’t rely on that assumption,” he added.
Before joining Chelverton, Robertson worked at Edinburgh Partners where he spent 13 years building the firm’s £1.5bn European business. Prior to that, he spent three years at Scottish Widows Investment Partnership (SWIP).
Rudd meanwhile, worked for seven years at independent research firm Willis Welby where he focused on cashflow analysis and before that, spent six years managing European long/short strategies at ABN Amro Bank.
