Why should you invest in Europe today?
Ben Moore, manager of Threadneedle European Select, tells us why investors should consider European...
Cyclists taking part in the Tour de France at the moment will be pleased that temperatures across the country have cooled significantly. Having recorded its highest-ever temperature of 45.9 degrees Celsius at the end of June, when continental Europe struggled with an intense heat wave, today temperatures are more manageable in the mid-late 20s.
Bike riders won’t be the only people in France thankful the sun has lost some of its heat this weekend: so will onlookers and the nation’s forces when French President Emmanuel Macron – like Trump last week – presides over a military ceremony to celebrate Bastille Day.
Celebrated on 14 July each year, La Fête nationale marks the anniversary of the storming of the infamous Bastille prison that day in 1789, a turning point for the success of the French Revolution.
Along with the weather and the world’s most famous bike race, France has also been making the headlines this month thanks to one of its most senior and trailblazing ministers, Christine Lagarde. Having been the first woman to become Finance Minister of a G8 economy and the first woman to head the International Monetary Fund, she has recently been nominated to take over the presidency of the European Central Bank.
But when it comes to investments in France, is there any reason to celebrate? And to which companies would a fund manager award the yellow jersey?
Five of our Elite Rated managers either have France as their largest country allocation, or more than a quarter of their portfolio invested in French-listed companies:
BlackRock European Dynamic is the Elite Rated fund with the highest conviction in the country, with a 31%* allocation. Its top ten includes holdings in LVMH, the multinational luxury goods conglomerate known for champagne brands Moët, Veuve Clicquot and Dom Pérignon, fashion houses Christian Dior and Luis Vuitton and Givenchy and Kenzo perfumes, to name but a few. It also holds Safran, the multinational aircraft engine, rocket engine, aerospace-component and defence company.
BlackRock Continental European Income isn’t far behind its growth counterpart, with 30%* invested in French companies. These include Sanofi, the multinational pharmaceutical company known for its prescription drugs and over-the-counter medicines; Engie, the multinational electric utility company; Vinci, the construction company with operations in more than 100 countries; and Bouygues, a diversified services group involved in three sectors of activity – construction, telecoms and media.
Threadneedle European Select has a 26.4%* allocation to the country’s companies. Its top holding is Pernod Ricard, the alcoholic beverage company that is likely to see a boost from this weekend’s celebrations. Also to be found in the top ten are Dassault Systèmes, a software company that develops 3D design, 3D digital mock-up, and product lifecycle management software; and L’Oréal, the world’s largest cosmetics company.
Schroder European Alpha Income has 25.9%* invested in French companies. They include AXA, the global insurance, investment management, and financial services firm; Total, the producer and supplier of oil, natural gas and low-carbon electricity; and Altran Technologies, a global innovation and engineering consulting firm that operates worldwide. It provides services in many sectors, such as aerospace, defence, telecommunications, automotive, nuclear, financial services and healthcare.
RWC Continental European Equity has a smaller weighting than the other funds. However, France is its biggest country allocation at just under 20%*. The fund’s top ten includes EssilorLuxottica, the international designer, manufacture and marketer of lenses to correct or protect eyesight; as well as Publicis Groupe, the multinational advertising and public relations company, which also happens to be the oldest and one of the largest marketing and communications companies in the world.
*Source: fund fact sheets, 31 May 2019