Odey Asset Management has established the Odey Pan-European fund, a Ucits that invests in Europe for capital growth.
The fund is identical to the Vitruvius European equity fund, a Sicav that is managed by Odey for the Italian market. The Pan-European fund invests in a portfolio of between 65 and 70 stocks across sectors and countries.
Hugh Hendry, a partner at Odey, will manage the fund. Hendry joined Odey four years ago and previously worked at Baillie Gifford. At Odey, he also manages hedge funds and the continental European fund.
When selecting stocks for the portfolio, Hendry will not be constrained by the benchmark index – the FT S&P Europe index - either geographically or in terms of industrial sectors. He says his experience of managing hedge funds enables him to select stocks in a way that focuses on capital preservation as well as growth.
Hendry initially takes a top-down approach and relies on a team of eight researchers and analysts. He will invest in stocks that are going up in value, then sell them when their value goes down. As the fund manager is free to invest wherever he sees fit, there could be periods where the fund is concentrated in a small number of sectors and a high turnover of stocks is likely.
Europe has been disappointing recently as a result of the global downturn and the outlook for the German economy looks particularly bleak. Although spectacular growth is unlikely, share prices are looking attractive across Europe and sophisticated offshore investors may feel the Odey fund's stockpicking approach is worth a gamble.
According to Standard & Poor's, the Odey continental European fund is ranked 1st out of 89 funds based on £1,000 invested on a bid-to bid basis with net income reinvested over three years to February 10, 2003.