Financière de l’Echiquier 24 April 2014
ECHIQUIER ECHIQUIERMAJOR MAJOR CORE CONVICTIONS TO THE FORE
INTERVIEW: FREDERIC PLISSON ECHIQUIER MAJOR PORTFOLIO MANAGER
ECHIQUIER MAJOR invests in European large cap growth stocks which are market leaders in their sector. Frédéric Plisson, who has managed the fund since its launch, outlines his strategy and investment ideas. ECHIQUIER MAJOR returned +18.6% in 2013 (+7.7% annualised performance since fund launch on 11/03/2005), despite the market environment being more supportive of "value" investments than growth strategies. How do you account for this performance ? - In 2013, as there were fewer opportunities within the “growth" investment universe, the management team opted to focus more closely on the value of equities and their upside potential. - This strategy led us to sell our holdings in companies trading at valuations which seemed stretched in the light of growth forecasts. This was the case for L’OREAL and GEBERIT* for example. - Meanwhile, the fund set up positions among clearly identified growth stocks which had lost momentum, such as LVMH and NOVO NORDISK*. - The portfolio thus became more concentrated, and currently comprises 40 stocks (vs. 45 on 31/12/2013). Fund NAV recently hit an all-time high at €198.77 on 22/03/2014. What strategy was adopted over the first few months of the year? - Our investment choices over the past few months have paid off, notably among stocks exposed to the global cycle (MICHELIN, CRH*), which have posted strong performances since the beginning of the year. - The fund also benefitted from a number of special situations, particularly the takeover bids launched on two of our portfolio holdings : BOURBON and SCANIA*. - Valuation remains the main criterion we use to assess the right timing to switch positions, or take profits, as was recently the case with H&M, DEUTSCHE POST, KRONOS et SODEXO*.
What are your current investment themes? - We have adopted an opportunistic approach: the market is offering opportunities to strengthen exposure to quality growth stocks which, according to our analysis, have been temporarily weighed down by the current context. - This is the case, for example, of stocks which are highly exposed to emerging markets (ADIDAS, SAB MILLER, HERMES*) and which have been impacted by turbulence among these economies, but which are in a strong position to capitalise on any future improvement. - The team is also focusing on turnaround stories: companies for which we anticipate a rerating (DAIMLER) or a change in growth profile (SMITH & NEPHEW*). - We are also adding to our holdings among a number of tech stocks which appear undervalued given their leadership position, such as SAP and ERICSSON*.
In what way has ECHIQUIER MAJOR’s investment philosophy changed? - Our core convictions have remained unchanged in 2014, based on Echiquier Major’s two investment philosophy mainstays: flexibility to think “out of the box” and adopt a contrarian approach, and to pursue a long term view. - Our investment strategy draws primarily on SRI, which enables us to fully understand the management and culture of each company, and provides a clearer view of extra-financial risks. During the last quarter, we held 8 SRI-dedicated meetings with selected portfolio companies, in order to asses progress made in this area. We noted a distinct improvement from BARRY CALLEBAULT, HSBC and LINDT.
ECHIQUIER MAJOR incurs a risk of capital loss. As the Fund is managed on a discretionary basis, there is a risk that it is not always invested in the highest performing stocks. For further information regarding risks and charges taken by this Fund, please refer to the prospectus and the KIID available upon request.
This document, intended for professional investors, is not contractually binding. Past performance is not a guide to future performance and is not constant over time. It should therefore not be the main factor in the subscriber’s investment decision: the other information included in the fund’s investment reports should also be taken into consideration..*Les noms des sociétés sont donnés à titre d’exemple : ni leur présence en portefeuille ni leurs performances ne sont garanties. Financière de l’Echiquier - 53, avenue d’Iéna – 75116 Paris – Tél. : +33 (0)1.47.23.90.90. – Fax : +33 (0)1.47.23.02.46. – www.fin-echiquier.fr