188. Building materials, healthcare, renewables and luxury goods – Europe is actually quite good at a lot of things

Barings Europe Select Trust co-manager Rosemary Simmonds tells us why the sector is often overlooked and underappreciated, despite having a number of growth drivers and innovation in numerous areas. She discusses the attractive valuations in the sector and why they are a safe bet for those looking for growth in a challenging environment. Rosemary also looks at the inflationary challenges facing the region and talks us through some of the companies that have benefitted off the back of the pandemic and the growing move to renewable energy.
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Barings Europe Select Trust invests in small and medium-sized companies, an area which is under-researched and ripe for good stock pickers. The fund is run by a team of four co-managers: Nicholas Williams, Colin Riddles, Rosemary Simmonds and William Cuss. The strategy itself is tilted towards growth companies, but the managers won’t overpay for them. This distinction is achieved using an impressive valuation process that can be customised for each stock. The final portfolio will typically hold between 80-100 companies.

What’s covered in this episode:

  • The long-term benefits of small-caps and why they are a safe bet when you are looking for growth in a challenging environment.
  • Why bottom up stock selection makes it easier to find winners in an inflationary environment
  • How Swedish company Thule has built a successful brand focused on outdoor living – and why it will be much more than just a Covid beneficiary
  • How multi-service provider Elis navigated the pandemic and is set to benefit from the resurgence in catering, hospitality and tourism
  • Why the demand for renewable energy and the move to electrification is beneficial to distributors like Rexel
  • How distributors with a wide range of suppliers are an underappreciated place to invest in an inflationary environment
  • Those not taking ESG seriously are missing key opportunities and risks when evaluating a business
  • How numerous growth drivers like the green deal, renewables, electrification and de-globalisation can bolster the region
  • Why current valuations make European smaller companies a moveable feast
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