Pockets of value still to be found in Europe

In spite of growing fears over Europe’s economic woes, the managers of the Four Active European ex UK fund argue that there are pockets of value to be found in certain sectors.

The stocks that have produced the most positive contribution to the fund’s returns recently include international digital security company Gemalto, Italian scooter manufacturer Piaggio, and sustainable agricultural business Syngenta.

Mr Ricci said: “Ideas only go into the portfolio if some of the potential holdings have a limited upside. We don’t invest in new ideas simply to churn the portfolio. The stocks that we bought six to 12 months ago have started, and carried on, doing well.”

According to the manager, the most significant recent transaction in the fund was shares of ATOS, the French based systems integrations group.

Mr Ricci argued that, in spite of the macroeconomic volatility in Europe, a large number of companies operate on a global basis and so therefore are still producing the desired returns.

“The ideal scenario is always to have the stocks that appreciate when the markets fall - that is not always possible. You have to think about volvaility constraints and tracking constraints and you’re invariably being pushed to larger names which reduce those kinds of terms.”

Barry Norris, manager of the £301.4m Ignis Argonaut European Alpha fund, is focusing his portfolio in less affected markets, such as Germany, Switzerland and Scandinavia.

Mr Norris pointed out earnings reports among major listed European firms have proved solid.

“A lot of that is due to the fact that companies in the stockmarket tend to be the biggest in the industry, tend to be more exposed to global growth and tend to have stronger balance sheets.”

The fund’s top holdings are in consumer services and financials, but Mr Norris is also picking up holdings in the energy sector.