Trustnet Magazine Issue 12 November 2015 | Page 20

INVESTMENT STRATEGY

EUROPE

These are the growth figures you
don’t want to see in your next ISA
Annual Platform Fees over 10 years*
NOT OUT OF THE WOODS YET

Adrian Lowcock, head of
investing at AXA Wealth,
believes the recovery is broadly
on track but agrees that Europe is
not out of the woods yet. “There
are still problems, not least that
any slowdown in the global
economy will have a significant
impact on the weak recovery in
the region,” he said.
However, he believes investors
in Europe are getting access to
better earnings growth than in
the US and at lower valuations:

INVESTORS IN EUROPE
ARE GETTING ACCESS
TO BETTER EARNINGS
GROWTH THAN IN THE
US AND AT LOWER
VALUATIONS
“Sentiment is still improving,
so there is further opportunity
for investment returns as
confidence in the region grows.

Focus should remain on the
longer term recovery as shortterm shocks can make markets
volatile.”
Haynes acknowledges there is
a high amount of risk aversion
and it can feel like Europe
has been lurching from one
negative headline to another,
but adds this has been somewhat
overdone. “If you invest in
Europe, investors need to
look through the geopolitical
‘noise’ that constantly makes
headlines,” he finished.

£1,000

0.45%

£900
0.40%

£800

0.35%

£700
£600

0.25%

£500
£400
£300

Trustnet Direct

£200
£100
0

A SAFE PAIR OF HANDS:
HENDERSON EUROPEAN SELECTED OPPORTUNITIES

1yr

For the more conservative investor, Lowcock recommends the Henderson European Selected Opportunities
fund, which has achieved a total return of 52 per cent over the past five years compared with 39 per cent
from the IA Europe (ex UK) sector average. The £2.11bn portfolio is run by John Bennett, who has close to
three decades’ experience investing in European stocks. Lowcock says: “Manager John Bennett pays close
attention to the wider economic picture and sector trends that affect the performance of large companies.
His approach is relatively defensive as he looks to get into market themes early on. His focus on large
companies also offers some protective characteristics.”

A “PUNCHY” OPTION:
SCHRODER EUROPEAN ALPHA PLUS

3yrs

4yrs

5yrs

6yrs

7yrs

8yrs

9yrs

10yrs

*The graph displays platform fees plus the cost of 5 transactions per annum with Trustnet Direct compared with
platforms charging 0.45%, 0.40%, 0.35% and 0.25% per annum in platform fees. Assumes £15,000 new ISA limit
invested each year for 10 years and assumes 5% growth net of charges.

The good news is that if you invest the new ISA limit of £15,000 per annum over the next 10 years and it grows at 5% per annum
net of charges, you’ll have built a nest egg of over £198,000 tax-free.
The bad news is that platform fees can seriously damage your wealth, as the chart above shows.

For intrepid investors looking to shoulder that extra bit of risk, Haynes tips Schroder European Alpha Plus
as a “punchy” option. James Sym, who took over the reins last year, runs the fund on an unconstrained basis,
looking to identify fundamentally undervalued stocks that are being overlooked by the broader market. The
£360.6m fund has delivered a 27 per cent return over the past five years. Haynes asserts: “I would expect it
to outperform in a recovery due to its positioning towards out-of-favour stocks.” The fund’s top-10 holdings
include Airbus and French carmaker Renault.

THE INCOME PLAY:
STANDARD LIFE INVESTMENTS EUROPEAN EQUITY INCOME

Connolly highlights Will James’ Standard Life Invest