Merrill Lynch Investment Management has unveiled the European dynamic fund, a unit trust that aims for growth by investing in Europe excluding the UK.
The fund is managed by Michel Legros and will contain around 60 stocks. Legros joined Merrill Lynch in 1991 and already manages a European fund for Merrill Lynch, the Mercury offshore sterling trust.
The hallmark of Merrill Lynch's dynamic funds is that fund managers are not constrained by factors such as company size, sector or a bias towards style or growth. The European dynamic growth fund is not fettered by geographical weightings, allowing the fund manager to invest wherever he feels the best opportunities are.
The fund draws on Meriill Lynch's in-house research within 26 industries, which includes company visits. Examples of companies that the European dynamic fund will invest in include companies such as Nokia, Royal Dutch Petroleum and Nestle.
Funds such as Gartmore's European focus and New Star's European growth are run on similar lines. They both allow their fund managers to break free from benchmark constraints. The investment strategy of the European dynamic fund is not new, but it marks a departure from aggressively managed funds with smaller portfolios of up to 40 stocks.
The European dynamic fund may suit experienced investors looking for a medium-risk European fund. Less experienced or cautious investors may not feel comfortable with its lack of constraints, which make investors totally dependent on Merrill Lynch's research and Legros' stockpicking skills.
According to Standard & Poor's, the Merrill Lynch European fund is ranked 6 out of 9 funds based on £1,000 invested on bid-to-bid basis with net income reinvested over three years to March 22, 2002.