2CG designed this offshore Oeic because there are many UK income funds for investors to choose from but few income funds focusing on continental Europe.
The fund will be managed by Glasse, who ran the M&G European dividend Fund for 10 years prior to the creation of 2CG. It will aim for income of at least 3 per cent a year plus capital growth by investing mainly in a portfolio of 30-40 mid-to large cap European stocks.
Most of the stocks will have a market capitalisation of at least £1.5bn but the managers will not be constrained by market capitalisation or industrial sector. However, it will not invest in emerging markets within Europe as these are beyond 2CG’s risk parameters for the fund.
2CG’s investment philosophy is based on a belief that getting the big stocks right is the lowest risk way of outperforming the stockmarket. It favours high quality stocks that are cheap relative to their history or their competitors. Particular emphasis will be placed on companies which look likely to sustain growth.
The fund has no initial charge, which is unusual for retail share class, but there will be a 1.25 per cent annual management charge from which 0.75 per cent renewal commission is paid to advisers.
Although economic growth across Europe has been uninspiring, a positive theme in the market is rising dividends and 2CG is well placed to benefit from this. However, as other fund management groups pick up on this theme, there could be more fund launches from better known names which will compete for advisers’ attention.