Stay in growth, holiday in value?
According to Kevin Murphy, co-manager of Schroder Income fund, there are two environments in which...
Janus Henderson fund manager John Bennett is one of the most experienced European fund managers in the industry with over 30 years’ experience and currently manages the Elite Rated Janus Henderson European Focus and Janus Henderson European Selected Opportunities funds.
We caught up with John to find out his views on Europe, and also to discuss recent changes to his funds and the benefits to investors.
“I certainly don’t ignore it, but I pay a fraction of the energy that the media gives it. Clearly it is newsworthy, but recession is a good thing for me as there are bargains during a recession. A good example is the US: things have never been so good and, as a result, there are no bargains to be found within those companies and I actually think it will disappoint.
“The great thing about the negatives around Europe – both economically and politically – is it suppresses valuations and creates opportunities. So, I am actually quite excited about the potential opportunities I will find.
“And investors should remember they are not investing in Europe; they are not investing in German growth or French politics. This is only the case if you are investing solely in domestic sectors like banks – and I fully expect these areas to decline in importance within the European investable universe.
“But the good thing about the investable universe in Europe is that it is broad, and it is deep. The real gems are there to be found and many are global in nature.”
“The narrative is that Europe is the past and Asia and Silicon Valley is the future. I actually think a lot of Silicon Valley is on the verge of disappointing. Europe is not the past – what it has been good at in the past it will be good at in the future – the likes of science, design and luxury goods – it will remain in the vanguard of those sectors.
“In addition, a factor of paramount importance in the future is the response (or lack of response) of management to disruption. What you want to avoid is those managers or teams who are asleep at the wheel because we are all in the cross-hairs of disruption. The future will belong to those management teams who get in front – and stay in front – of digital disruption.”
“Essentially, we have been refining the number of stocks in our portfolio. Broadly speaking investors can invest in passive or active funds, and I think the challenge of active management is greater than it has ever been, due to the exponential growth of passive.
“We meet that challenge by saying we are truly active and don’t hold 80 or more stocks to get exposure to everything. Investors will now see our funds holding around 40-45 stocks and this move to be more active is a refinement rather than a revolution.
“For example, I don’t see any trading opportunities in the banking sector at the moment and the only way I would change my mind would be If I saw the return of inflation. That is an active position.
“The shorter-term impact is the funds will be more volatile and investors must be prepared for that – can they stomach 6% of underperformance over a 12-month period instead of 3%? The upside will clearly be stronger outperformance when our views are correct, which we believe they will be more often than not.”