One relative newcomer, launched in December 2015, which has a strong early track record and has avoided banks is CF Miton European Opportunities, run by Carlos Moreno and Thomas Brown. It made a top-quartile 18.9% over 2016 until the end of November.
“We look for strong, stable franchises that are expanding globally from a European base and which have outstanding potential to grow sales and increase margins. They must also trade at a substantial discount to their intrinsic value,” the managers say.
“We remain underweight in the energy, telecoms, financial and utility sectors. We believe that many of the companies in these areas face significant earnings pressure over the long term.”
That said, the managers can still find opportunities within European banks, outside of the conventional areas. At the end of the summer, the fund initiated a position in Skandiabanken, which is a pure online bank based in Norway.
“We started a position shortly before its third-quarter results, which were very strong,” Moreno and Brown say.
“It has none of the legacy issues hitting the rest of the banking system, such as questionable asset quality and a redundant branch network, and we expect excellent long-term performance from the shares.”