Merrill Lynch Investment Management has established the MKIF European growth fund, a Luxemburg-based Sicav which invests in European large and mid-caps.
Olivier Rudigoz, who has 14 years' experience of managing European funds, will run this fund. He started his investment management career as part of the European equities team at Baribas Asset Management in France. He then worked for Putnam Investments in Boston, before joining Merrill Lynch Investment Management in 1999.
When selecting stocks from the fund, Rudigoz will go through a three-stage bottom-up filtering process. First, he looks at all European stocks above a certain market capitalisation. This provides him with a growth universe of approximately 500 stocks, which are reduced to around 300 stocks.
He will then rank the 300 stocks in order of attractiveness to provide a research list. These stocks are then examined, starting with the most attractive first, in terms of the industry they are in and the individual characteristics of the company. Rudigoz will analyse the cash flow and growth potential of each stock and will make assumptions about future growth prospects on the basis of his findings.
The final stage is the creation of a buy list, where Rudigoz considers factors such as risk control and how much of each stock to have in the portfolio.
Robust economic growth looks unlikely in Europe at present, so modest growth is all that can reasonably be expected. There may be some companies who can generate growth in difficult conditions, but to find them Rudigoz must ensure his filtering process is spot on.
According to Standard & Poor's the MLIF European value fund is ranked 30 out of 233 funds based on £1,000 invested on a bid-to-bid basis with gross income reinvested over three years to November 15, 2002.