Selecting Top Performers

BY GEORGES GUTMANS

Company News
1 Dec 2015

BY GEORGES GUTMANS

We are happy to announce that the EI Sturdza Strategic Europe Value Fund is celebrating its fifth anniversary. The Fund is advised by Portfolio Manager Willem Vinke of Lofoten Asset Management, who has been awarded top ratings by both Citywire and Morningstar for his consistency in delivering benchmark-beating returns, despite the challenging market conditions since its inception.

The Fund’s performance of 122%* since 2010 significantly outperforms that of the MSCI Europe Total Return benchmark, which returned 59% during the same period, putting Willem in the top 2.5% of managers globally and the top 3% of European equity managers in Citywire’s fund manager database. Furthermore, the Fund has offered investors an annualised return since inception of 17% compared to 10% of the MSCI Europe Index.

The Fund’s compelling risk/reward profile has been noted by a number of industry experts and is evidenced by the following awards and accolades: 

In addition to the above rankings and ratings, we are pleased to announce that Willem was recently (24.11.15) awarded the best European Fund Manager prize in Citywire’s Italian Fund manager and group awards 2015.

The Portfolio Manager Willem Vinke

Willem has been involved in the management of European equity funds since 1995 and has been in the financial industry since 1992. He previously held senior positions with Morgan Stanley, JO Hambro Capital Management and Parcom Capital (a subsidiary of ING), before establishing Lofoten Asset Management, the Investment Adviser to the Fund, in 2009. 

Willem is fluent in five languages and holds a BSc (Hons) in Management Sciences from the University of Manchester, an MA in European Studies from the College of Europe, Bruges, and an MSc in Economics from the London School of Economics and Political Sciences. In addition, Willem is also a CFA Charter holder. 

The Investment Philosophy

The EI Sturdza Strategic Europe Value Fund’s investment philosophy is based on fundamentals, using a bottom-up stock selection process to determine value, identifying and selecting high quality companies. Quality companies being defined as those that are market leaders, that exhibit stable and visible recurring revenue streams, with high margins, low capital intensity and quality management.  

The investment approach followed by Willem focuses on corporate value based on cash flow (operating cash flow, free cash flow and earnings before interest and tax depreciation and amortization “EBITDA”), and the quality of the companies’ business models and management. 

This “quality value” is then analysed with regard to how attractively a stock is priced. This process tends to result in overweight exposures to sectors such as consumer driven, healthcare, IT and support services, while the Fund generally avoids commercial banks, insurance, commodities, chemicals and utilities.

The overall result of this approach is a high conviction, benchmark agnostic portfolio of 25-35 positions within the universe of large capitalisation liquid stocks of European companies, or companies listed on European exchanges.

In order to ensure that investments in quality companies deliver actual returns, another driver of returns is arguably necessary: value. In other words, the aim is to buy quality but at a favourable price. As a result, the team spends a lot of time developing their own internal models, using a Discount Cash Flow (DCF) approach, with the aim of finding companies with at least 40% upside. Albeit far harder than it used to be, it still is possible to find such opportunities.

Overall, the Fund looks for companies that are in charge of their own destiny; companies that can determine what happens to them by the actions they themselves take, rather than being overly influenced by macro events and noise.

These general principles of adopting a quality approach are relatively simple to understand. However, the devil, as is almost always the case, is in the implementation: considerable experience and analytical work is required to correctly interpret the volume of information available daily to any investment manager. Such intensive, analytical work also requires a corporate structure that allows portfolio managers to focus exclusively on managing money. This is achieved as a result of EI Sturdza’s innovative business model, which sees the Company assuming responsibility for all legal, administrative, compliance and distribution services, as well as providing institutional style risk management oversight. This frees Willem and his team to focus purely on research, asset allocation and portfolio construction, putting their focus on quality value into practice.

 

Disclaimer: * Data provided in relation to the EUR Institutional class ** CITYWIRE Source and copyright – Fund Manager Willem Vinke is currently rated by Citywire AAA. The Ratings are based on the Manager’s three-year risk-adjusted performance to the end of August 2015. Further Willem is Eurostar rated by Citywire for his 3-year risk adjusted performance on all European mandates for the period 30 June 2012 – 30 June 2015. EIS Sturdza Investment Funds are Platinum rated in the Equity – Europe Sector by Citywire for their rolling risk adjusted performance, across the section, as at 30.06.15. © 2015 Morningstar: All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar not its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results. The Strategic Europe Value Fund has a Morningstar 5 star overall rating as at October 2015. This communication is issued in Guernsey by E.I. Sturdza Strategic Management Limited which is regulated by the Guernsey Financial Services Commission. Any investments or investment services mentioned on this communication are not intended for retail customers. Consequently, this communication is only made available to professional investors and eligible counterparties and should not be relied upon by any person that does not possess professional experience in relation to investments. If you are in any doubt as to whether you possess suitable experience in relation to investments please consult your financial adviser. Under no circumstances should this document be forwarded to anyone in the United Kingdom who is not a professional client or eligible counterparty as defined by the FCA. Further this communication is not an offer or an invitation to purchase financial instruments but intended as information. Further the information contained in this communication does not represent a research report. E.I. Sturdza Strategic Management Limited has not considered the suitability of investment against your individual needs and risk tolerance. Investors should refer to the Fund Prospectus and/or KIID for detailed information about potential risks involved in investing in financial instruments as well as the latest half-yearly report and unaudited accounts and/or annual report and audited accounts. The information contained herein is estimated, unaudited, may be subject to change and reflects the performance of the relevant fund offered by E.I. Sturdza Strategic Management Limited during the period indicated. Any opinions or estimates expressed herein are at the date of preparation and are subject to change without notice; however no such opinions or estimates constitute legal, investment, tax, or other advice. Individual performance of the Fund may vary and historical data is not an indication of future results. The value of the Fund and the income which may be generated from it can go down as well as up and therefore investors must be able to bear the risk of a substantial impairment or loss of their entire investment. The Swiss Representative and Swiss Paying Agent is Banque Eric Sturdza, Rue du Rhône 112, P.O. Box 3024, CH-1211 Geneva 3. Copies of the Prospectus, KIID, articles of association, annual and semi-annual reports may be obtained free of charge at the seat of the Swiss representative. E.I. Sturdza Strategic Management Limited, Sarnia House, Le Truchot, St Peter Port, Guernsey GY1 1GR is part of the Sturdza Private Banking Group. Company Registration Number: 35985. Copyright Morgan Stanley Capital International, Inc. 2015. All Rights Reserved. Unpublished. Proprietary to Morgan Stanley Capital International INC.