Two other top European managers I like, Richard Pease of New Star and Rob Burnett of Neptune, are also bullish. The reasons for optimism are that, in the main, the corporate sector is in good health, shares are attractively priced and the economic environment is sound. Furthermore, confidence is growing and a strong stream of corporate deals will encourage rises in share prices.
All these funds have very different portfolios. Schroders has nearly half its portfolio in French and Swiss shares, with Nestle and Total being the biggest holdings. Fidelity has nearly 30 per cent of its portfolio in UK shares, with the top holdings being ENI and BP. New Star invests in quite a lot of smaller companies as well as bigger firms and its top holdings are in the Netherlands and Ireland, Aalberts Industries being the biggest holding and Anglo Irish Bank second. Neptune has over 40 per cent of its portfolio in the Netherlands and Germany, with the majority of the shares being in industrials and financials.
The two European smaller companies funds I like are Threadneedle European smaller companies and Aberdeen European smaller companies. The Threadneedle fund is mainly invested in industrial shares (over 50 per cent of the fund).
The Aberdeen trust is widely spread geographically, with Swedish, Austrian and French shares accounting for a little above 10 per cent each of the fund.
All these funds are excellent and for bigger portfolios, it would be wise to spread the European part of the portfolio between these funds.