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Edinburgh Partners on value quest

Edinburgh Partners has brought out a Dublin-domiciled Oeic with three sub-funds &#45 UK opportunities, European opportunities and global opportunities.

The company was founded in 2003 by former Scottish Widows Investment Partnership duo Sandy Nairn and Graham Campbell. Its first product, the EP global investment trust, appeared at the end of 2003. It focuses on undervalued stocks and the Oeic sub-funds will be managed along the same lines.

The UK opportunities fund contains around 30 stocks, with 30 per cent of the portfolio invested outside the FTSE 100 index. Fund manager Graham Campbell is currently avoiding growth stocks in areas such as telecommunication and technology because it is felt that they are overpriced.

The European opportunities fund adopts a similar approach to Europe excluding the UK and will also contain 30 stocks. Companies will make it into the portfolio if they can generate cash, have strong balance sheets or there is a catalyst for improvements in share price, such as company restructuring. Smaller companies may make it into the portfolio if the market has underestimated their full growth potential.

The global opportunities fund run by Sandy Nairn will have 40 stocks and surprisingly will have almost no US holdings because Nairn thinks it is hard to find undervalued companies in this area. However, Nairn is currently positive on Japan as it is benefiting from trade with China. In terms of industrial sectors the fund will have a good spread with only a few technology stocks in recognition of the fact that although undervalued and represent good value, these companies can be risky investments.

The success of each of these funds depends upon the fund managers selecting stocks where future growth potential is not already reflected in the valuation. Although valuation is important, these managers may be missing opportunities that do not fit with their value criteria, as demonstrated by the global fund&#39s minimal exposure to the US.


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