The £22m Martin Currie European Equity Income Fund, now managed by Ross Watson, will hold between 40 and 60 stocks in what is still a multi-cap proposition. It is a Europe ex UK fund and is benchmarked against the MSIC Europe ex UK index.
This follows the announcement at the end of last year about the change of mandate that saw the European Equity Fund managers, Eric Woehrling and Pal Chidambaram leave, at which point Watson took over as interim manager.
Watson is an income-specialist manager running in excess of £300m of institutional client money.
“Valuations are currently pricing in much of the negative news flow and are reasonably attractive,” he explains. “At a sector level, the fund is overweight in consumer stocks, thanks largely to two auto companies: Daimler and Continental. I like these stocks as they have good exposure to new car markets in the US and China, are well financed and managed, and offer high, well-covered dividends as well as strong growth prospects.”
He is also positive on energy, especially the oil service sector, and is overweight materials of which he says: “My view is that dividend growth will be strong here and ahead of the market’s expectations.”
Areas he is not a fan of include telecoms, for example, where he describes yields as being high but growth is challenged, as are future dividend levels.
“Apart from banks and telecoms companies (which we expected to be bad), I have been quite encouraged by dividend announcements across Europe. Balance sheets are in good shape, companies have access to finance, and I think that dividend growth can be maintained. Indeed, I expect dividend growth of 7% from the portfolio over the next year”.
