Verrazzano Advantage European
 Fund Aim

A Long Only equity fund that launched in December 2013. Verrazzano Advantage Europe Fund aims to achieve long-term capital growth by investing at least 80% of its assets in the shares of companies in continental Europe excluding the UK. The strategy adopts a flexible, diversified approach to investing in European equities utilising fundamental analysis and active portfolio management.

 Fund Overview

The fund aims to outperform the MSCI Europe ex-UK Index on a calendar year basis over the medium-term.The Verrazzano Advantage European fund (“VAEF”) is a UCITS compliant long only fund. The Fund aims to achieve long-term capital growth by investing at least 80% of its assets in the shares of companies in Continental Europe, excluding the UK.

The portfolio managers adopt a flexible, diversified approach to investing in European equities utilizing fundamental analysis and active portfolio management. The Fund’s approach means it can invest significantly in particular companies, industries and countries. This means it will typically hold fewer investments than other funds (typically 40-60 positions). The portfolio will be composed of both long-term core fundamental ideas and short-term tactical ideas, with core fundamental ideas typically representing approximately 70% of the portfolio.

 Management Comment

The Funds proved resilient in November, but the month itself was rather frustrating, as European equity markets retreated, at a time when the US and Asian markets were on a roll, pushed on by their tech behemoths, with banks taking the baton towards the end of the month.  No piece of news can seemingly derail the march upwards and onwards of the US market, which has just registered its 13th consecutive up month, something not many people have witnessed in their lifetimes.

It is all the more frustrating as the macro backdrop for the Continental European economies continues to go from strength to strength, with the German IFO hitting 50-year highs, and with the traditional laggards of Italy and France witnessing loan growth, booming consumer confidence, rising GDP growth expectations, and all of that without inflation rearing its ugly head (yet).  True, there is never a dull moment on our old Continent, with Cataluna, Germany and Northern Ireland grabbing the headlines recently.  But solutions could be found in the near term, and in the meantime, domestic companies are thriving in this new environment of top line growth, pricing power, increased confidence and visibility, with record low interest rates.

So, what is holding Europe back?  Firstly, the stronger Euro this year, as the seemingly doomed currency last year, has gone up from 1.06 to 1.18 in 2017, while most other regions are succeeding in continuing to debase their currencies.  Secondly, the lack of proper M&A action, even after such a prolonged period of limited activity.  Last but not least, the second wave of investment into European equities has not yet properly materialized, apart from a spurt in September.  Money flows have preferred to continue to play it safe in Europe, by favoring the big multinationals, exposed to global GDP growth rather than domestic GDP growth, at a time when the FX exposure will go against them. Pharmas have been very poor, but staples, defensives and global cyclicals continue to be the darlings of foreign investors.

All other things being equal, we remain constructive on European equities, with the belief that domestic value plays should eventually attract the incremental money flows from here on in.  Having said that, recent sector rotation has offered very compelling entry points in the likes of AB Inbev and Reckitt Benckiser.  We also believe that Telcos, one of the big value traps of this year, should finally attract investors, as was the case late in 2016, when they finally had a bout of strong performance.  Last but not least, we expect some of our big bets to finally perform for us, having traded sideways most of this year (Imperial Brands, ThyssenKrupp, Shire).

While we slightly reduced our exposures in the early days of December, we are maintaining a reasonably high level of gross and net exposures of 131% and 30%.

Guillaume Rambourg, December 08, 2017

 NAV Chart
 Shareclass Information
Class EI EuroClass TypeInception dateISINBloombergManagement FeePassporting
EI EURDistribution30/03/15LU1191054557VADVEED LX0.65%UK
EI EURAccumulation10/12/13LU0990520313VADVEEU LX0.65%UK
EI GBPAccumulation10/12/13LU0990520404VADVEGB LX0.65%UK
EI GBP HAccumulation10/12/13LU0990520586VADEGBH LX0.65%UK
EI USD HAccumulation10/08/15LU0990520743VAEEIUH LX0.65%UK
I EURAccumulation10/12/13LU0985384451VADVIEU LX0.75%UK
I GBPAccumulation10/12/13LU0985384618VADVIGB LX0.75%UK
I GBP HAccumulation10/12/13LU0985384881VADIGBH LX0.75%UK

This table was established by Verrazzano Capital which is the UCITS management company for the Verrazzano SICAV. Although best efforts were made in gathering data and designing the table, Verrazzano Capital and the Verrazzano SICAV do not make any representation as to the accuracy and completeness of its content. This table may be subject to frequent updates and therefore may not be fully updated at this moment in time. It is your responsibility to ensure that the version you are using is the most up-to-date. There are numerous risks associated with equity investing, including but not limited to liquidity risk, currency risk and market risk. All risks should be carefully understood and considered before making any investment. All relevant details are available in the related prospectus and Kiids which are available on this website. The information on this website should not be construed as an investment advice. Past performance is not indicative of future results.

Characteristics
Launch date
11.12.13
Portfolio manager

Guillaume Rambourg

Liquidity
Daily
Fund reference currency
Euro
Fund domicile
Luxembourg
Fund legal structure
SICAV
Management company
Verrazzano Capital SAS
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