Four funds with Euro ‘vision’

Eurovision is here again! This annual guilty pleasure sees a wide variety of singers and groups from across Europe compete in front of a global audience of millions.

Here in the UK, the event, which sees everything from heartfelt ballads to whacky performers in mad-cap costumes, is narrated by the acerbic tongue of comedian Graham Norton.

But while it’s easy to laugh at this long-running competition, it has helped launched the careers of international megastars such as Abba, Bucks Fizz and Celine Dion.

To mark this year’s final, which is taking place in Liverpool, we look at stocks in the portfolios of European fund managers that have also enjoyed success.

Nestlé

The world’s largest food and beverage company started rather more modestly back in 1866 with the founding of the Anglo-Swiss Condensed Milk Company. Separately, Henry Nestlé developed a baby food in 1867 – and 38 years later his business merged with Anglo-Swiss to form the Nestlé Group.

Today, Nestlé has more than 2,000 brands that include KitKat, Cheerios, Nesquik, Buxton mineral water, and Häagen-Dazs ice cream. The company employs around 275,000 people, sells its products in 188 countries, and generated sales of CHF 94.4bn (£85bn) in 2022*.

Nestlé is the largest individual stock holding** in the GAM Star Continental European Equity fund that’s managed by Niall Gallagher, Christopher Sellers, and Chris Legg. They look to buy large companies that they believe will grow faster than the index – ideally when those companies are out of favour, or their prospects aren’t reflected in the share price. Three types of companies are preferred: Those disrupting industries; those dominating their sectors; and those with deluxe goods and services. 

Novo Nordisk

The pharmaceutical company, which is celebrating its 100th anniversary this year, began life as two small Danish businesses: Nordisk Insulinlaboratorium and Novo Terapeutisk Laboratorium. The former commercialised the production of insulin, whose discovery meant that life expectancy for diabetes improved dramatically as it was no longer seen as a death sentence. Two former employees of Nordisk – brothers, Harald and Thorvald Pedersen – formed Novo Terapeutisk Laboratorium and the businesses were fierce rivals before merging in 1989.

Today, its treatments benefit millions of people living with diabetes, obesity, and rare blood and endocrine diseases. According to the company, it supplies 50% of the world’s insulin supply.

It’s also the current largest stock holding – with a 5.58% share of assets – in the Janus Henderson European Selected Opportunities fund**. The portfolio aims to provide a return, from a combination of capital growth and income over the long term, which is defined as being at least five years. Its manager, John Bennett, focuses on under-researched opportunities in compiling his high conviction collection of 40 to 50 mega and large-cap stocks. We like John’s pragmatic approach and the fact he takes into consideration the macroeconomic environment and various sector trends. 

RELX

The global provider of information-based analytics now has customers in more than 180 countries and employs more than 35,000 people. It was originally known as Reed Elsevier following the 1993 merger of British publisher Reed International and Elsevier, a Dutch scientific publisher. The rebranding to RELX was announced in early 1995.

Today, the company’s stock is traded on the London, Amsterdam, and New York Stock Exchanges. The overall business operates in four key sectors: Risk; scientific technical & medical; legal; and exhibitions.

RELX is the largest holding in the Jupiter European fund**, which is now managed by Mark Heslop and Mark Nichols. Their aim is to identify companies with excellent management teams at the helm and strong business models that are exposed to the drivers of long-term growth and sustainable returns on capital. The result is a concentrated portfolio of 35 to 45 stocks. 

ASML Holding

Semiconductors have become increasingly crucial over the past decade. In fact, they are vital components in a wide variety of products. ASML Holding, which was founded back in 1984 and employs more than 40,000 people, is a key player in this very important industry.

The business was formed in 1984, when electronics giant Philips and chip-machine manufacturer Advanced Semiconductor Materials International (ASMI) started on a new venture. The idea was that the newly created ASM Lithography systems would cater for the growing semiconductor market. Since then, it’s gone from strength to strength.

The stock is the second largest holdings in Ben Moore’s CT European Select fund**. Ben has been in the fund’s hotseat for a little over two years, having taken on the lead role in January 2021, and has a fantastic understanding of his chosen companies. The fund’s philosophy is based on the premise that a company’s intrinsic value is determined by its growth, returns on capital, sustainable competitive advantage and pricing power. This develops a thorough understanding of the industry in which a firm operates, the competitive landscape it faces, and the actions being taken to improve its position. 

*Source: Nestle, annual review 2022
**Source: fund factsheet, 31 March 2023

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and do not constitute financial advice. The mention of specific securities and funds is for illustration purposes only and not a recommendation to buy or to sell.