CT European Select

This fund invests in a portfolio of predominantly large-cap European equities. Manager Ben Moore, who took on the lead role in January 2021, has maintained the distinctive process, developed over a number of years, that focuses on industry structure and a company’s competitive position. Firms that can defend their margins and industries with barriers to entry are preferred. The fund has performed particularly well in falling markets using this philosophy.

Previously Threadneedle European Select

Our opinion

CT European Select has an excellent patient process, which has repeatedly proven itself. Lead manager Ben has a fantastic understanding of the companies in which he invests, and this fund has delivered some of the strongest returns in the sector, while simultaneously being less volatile than most of its peers. We believe CT European Select represents a core European equity holding.

Fund manager

Ben Moore became lead manager on the fund on 1st January 2021, having been co-manager since April 2019 alongside industry stalwart David Dudding. Ben originally joined the European equities team in 2015 as an equity analyst, initially working with smaller companies. Before joining the company, Ben spent six years with Goldman Sachs where he interacted with Columbia Threadneedle as a client. He holds an MA in History of Art from Cambridge University and studied Music at the University of the Arts, Berlin. He also holds the Chartered Financial Analyst designation. David Dudding, who was lead manager on this fund from 2008 to 2021, remains on the fund as a deputy manager.

We try to find companies that have the ability to raise prices. Typically consumer goods companies can do that because they have very strong brands.

Ben MooreFund manager

Investment process

The investment philosophy of CT European Select is based on the premise that a company’s intrinsic value is determined by its growth, returns on capital, sustainable competitive advantage and pricing power. This approach aims to develop a thorough understanding of the industry in which a firm operates, the competitive landscape that the firm is facing and the actions it is taking to improve its positioning.

The key inputs to idea generation are thematic, sector and macroeconomic views, company meetings and external research. Companies likely to show the most promise will exhibit some or all of the following characteristics: there has been a material corporate event, the company is under-researched in the broking community, consensus forecasts appear inaccurate, or the company fits the team’s current economic, thematic or credit views.

Supported by the European team, Ben avoids industries with regulatory uncertainty, such as banks or telecom companies and will sometimes invest in stocks without pricing power - but only if the firm is the lowest-cost producer in the industry. The final portfolio is concentrated, with almost 50% typically held in its top 10 holdings.

ESG

ESG - Integrated
Columbia Threadneedle has a firm-wide approach to considering ESG factors. It has a universal process embedded across all its strategies which provides a proprietary ESG score for each stock. This is performed by the independent Responsible Investment team that prepares its own detailed analysis on each stock from an ESG perspective. By having a specialist team dedicated to this, the analysis drills down on every aspect of ESG and the team is not distracted by financial factors.

Industry standard frameworks, such as Sustainability Accounting Standards Board (SASB), are used, as well as guidance from the Taskforce on Climate Related Financial Disclosures to help build models. This score is then provided to the equity analysts and managers who use it alongside their fundamental analysis to assess companies. The score will also be used as a basis from which to engage with the respective companies on any issues identified.

Ben is not limited by these ESG scores, though they are used for informational purposes. However, the quality approach of the fund leads to a correlation with good ESG scores regardless.

Risk

Risk management is embedded into all stages of the process. The analysis and control of risk takes place at stock, sector and portfolio level and is constantly monitored. Before buying a new stock or adding to positions, portfolio managers will consider the impact on the existing portfolio, including changes to sector weight, changes to style, and the risk budget. Ben’s history in smaller companies means he takes a very granular approach to his companies when looking at the final portfolios and this is reflected in the risk/reward balance when looking at the wider portfolio. Ben constructs the portfolio with respect to sector and thematic exposures, ensuring the direction of the portfolio is correct, risk is as intended, and the portfolio is adequately diversified.

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