Gartmore sees investor interest rise in Ireland

“The Irish economy is growing at a fast rate, maybe as much as 6-7% this year,” he says. “External investors are taking greater interest in Ireland. Historically, this was a small market and was largely ignored, but it is now seeing interest from overseas investors who appreciate the accelerated economy,” he adds.

Williams’ small-cap fund can hold a maximum of 10% of its portfolio in Ireland. As a result of his positive outlook over the short and medium term, the fund currently has 8.5% of its assets in Irish stocks.

According to Williams, Ireland’s corporate tax rate of 12.5% is considered to be low compared with the rest of Europe. The rate has not only been attracting foreign direct investment from America and the Far East, but also growing interest from other European countries.

Demographically, Ireland also has a young, skilled labour force, which has encouraged many foreign corporations to relocate to the country, he adds.

While Williams acknowledges that valuations are currently rising in Ireland, he points out that they were previously too cheap. The current price/earnings ratio is still not expensive, at about 13.9x, Williams says. He adds that a return to regular valuations may lead to an increase in the number of initial public offerings on the Irish market.

Williams says that companies with high domestic exposure should perform well this year.

Companies such as Ryanair and recruitment company CPL Resources have also been growing rapidly, while Irish pharmaceutical companies are a recovery story and a good long-term franchise.

Within the small-cap fund, Williams’ largest Irish holding is the Kingspan Group, which manufactures insulation and structural products.

Williams also manages the only investment trust that invests entirely in Ireland, the Gartmore Irish Growth fund. The trust has returned 53% in the last year, according to the Association of Investment Trust Companies.

l See Patrick Collinson, page 28