GAM Star Continental European Equity invests in large companies, with the team preferring those they believe will grow faster than the index. The team looks to buy stocks at the point where they are either out-of-favour or where growth prospects are believed not to be fully reflected in the share price. The fund has a low turnover and is not constrained to an index.
Niall Gallagher’s pragmatic approach and vast experience in European equities stands him in good stead for managing this fund. The depth of analysis assures investors that due diligence has been performed on investments. Niall and the team also exhibit excellent patience in their process and conviction in their decisions, supported by a standout risk-based portfolio construction process.
Founded in 1983, Global Asset Management (GAM) operates in more than 10 countries worldwide, with offices in Europe, North America and Asia. Acquired in 1999 by UBS and then by Julius Baer in 2005, it separated from the latter in 2009 to form an independent, publicly-listed asset management group. GAM manages more than 60 investment strategies across a range of asset types, including fixed income, absolute return and funds of funds.
Niall Gallagher has more than 20 years of industry experience and has accumulated a prestigious roster of employers over that time. He started his career as an economist at the Bank of England, before he moved to BlackRock as an investment analyst. He progressed to managing continental European equities at T. Rowe Price, before joining GAM in 2009. Niall holds an economics degree and an MSc in Economics and Finance, as well as being a CFA charterholder.
For the record, my being Irish is not why we are so heavily overweight the index in Ireland. These stocks met our criteria of being well-managed and having low debt levels – perhaps a reflection of being domiciled in God’s own country.
Niall GallagherFund manager
Niall looks for three types of companies: those disrupting industries; those dominating their industries; and those with deluxe goods and services. Meetings with company management are a key source of ideas for the fund, whether that be management of the company itself, or of the supply chain that it is involved in. With these ideas, Niall and his specialist analysts will perform detailed analysis on the finances, industry, business and suppliers to identify what will drive the value creation in the stock. The result is an unconstrained portfolio of 30-50 stocks.
ESG - Integrated
ESG is integrated within this fund’s process as part of the comprehensive bottom-up stock analysis. There is a framework form incorporating specific factors which the manager follows, informed by the Sustainability Accounting Standards Board (SASB) Materiality Map. This identifies sustainability issues that are most likely to create a financial impact on the company’s operations, and whether this will have an impact on the future share price. A lot of this work will be incorporated into determining the cost of equity for the company, to give a full understanding of the potential cost to the company and the impact on the stock’s valuation. The result of this work is displayed prominently on the front of the investment template for any stock. The fund may not exclude all companies that investors may consider ‘ESG negative’, however. The analysis is done on a case-by-case basis and determines whether the ESG issues are material, whether they will have an impact on the firm, and whether the firm is looking to improve on any issues.
The volatility of GAM Star Continental European Equity is slightly below the sector average, due to a bias towards larger companies. However, due to the unconstrained and concentrated nature of the portfolio, the manager may deviate from the benchmark, which can increase risk. Investors should also be aware of the currency risk.
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