Dubai: With critical elections due in Europe, fund managers like Columbia Threadneedle Investments, which manages 433.5 billion euros of clients money, is preferring to investment in sectors like consumer staples and utilities.
“We are not trying to chase elections results, we are trying to have long-term economic trends and find companies that would be stable in the whole investment cycle. The political results for these companies wouldn’t impact their businesses,” said Francis Ellison, client portfolio manager at Columbia Threadneddle Investments.
The most-active fund called as Threadneedle European Select Fund, which has 3.5 billion euros in assets, gave a return of 10.2 per cent as against the index return of 7.8 per cent.
Ellison said if they focus on micro trends they may be on the wrong side of the elections, but he is willing to take the risk. “This is because any short-term bounce in the market is based on that political outcome is not necessarily sustainable. The only thing that is sustainable is companies that sell good products that consumers want in a way that they are able to charge those prices,” Ellison said.
The fund manager takes inputs from Micheal Porter, professor at Harvard Business School, on competitive advantage, and choose companies. Columbia Threadneedle is also buying the highest quality banks which are well capitalised. In all, the fund invests in 40 large cap and a few small cap stocks too.
“There is rich universe of companies in Europe and have been in existence since the past 100 years,” Ellison said, adding “Europe can provide good returns, along with good dividends.”
However, he warned that extreme protectionist stance from the United States, or terrorist tensions could derail the rally.
