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DWS targets Europe

Deutsche Asset Management, which is rebranding as DWS Investments, has introduced the DWS European opportunities fund.

The fund, along with the recently created DWS UK opportunities fund, is a higher-risk, addition to the Oeics in the company’s existing range. It aims for capital growth by investing in a concentrated portfolio of 25 European stocks, excluding the UK.

It will be managed by Julian Barrell, who joined Deutsche in 1997 as a member of its European equity team. When picking stocks Barrell will have access to Deutsche’s global equity research portal, which provides information on around 114,000 stocks. Like the UK opportunities fund, the European opportunities fund will focus on stocks which have strong cash flow, good quality management and that appear undervalued.

The more aggressive nature of this fund reflects the need for higher risks to be taken to produce the levels of return investors became used to in the 1990s. A concentrated portfolio of 25 stocks will mean that there is less chance of stocks which perform well being diluted by poor performers, which can happen when portfolios contain a larger number of stocks.

However, small portfolios are more volatile and riskier than larger portfolios. With fewer stocks to compensate for poor performers, the fund manager is under more pressure to pick the winners and avoid the losers. If he choose the wrong stocks, the effect on the returns will be magnified.

According to Standard & Poor’s, the Deutsche European growth fund is ranked 55 out of 94 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to August 23, 2002.

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