Brookes and McDonald sell Cazenove European to seek areas of depressed value


Schroders’ multi-manager team sold out of the £915.1m Cazenove European fund after its manager quit as they seek opportunities in more depressed areas of the European equity market.

Marcus Brookes and Robin McDonald, who joined Schroders last month after it acquired Cazenove Capital Management, disposed of the fund in their £217m Cazenove Multi-Manager Global, £54.2m Multi-Manager Diversity Tactical and £21.5m Multi-Manager Diversity Balanced funds.

“Towards the end of the quarter we switched our holding of Cazenove European into a new position in Invesco Perpetual European taking advantage of the greater skew to our favoured areas of selective depressed value,” the managers explain in their latest investor update.

The £1.1bn Invesco Perpetual European Equity fund is avoiding being too defensively positioned as manager Jeffrey Taylor believes the eurozone’s macroeconomic picture will improve this year on the back of ongoing reforms and pro-growth measures being implemented on the continent.

“In our view, many defensive stocks (e.g. consumer staples and luxury goods) perceived by the market to offer ‘safe-haven’ characteristics have become too expensive,” Taylor wrote in his latest factsheet.

“We believe many financial companies, cyclical stocks (those stocks more exposed to the economic cycle) and peripheral countries perceived by the market to be risky have become more attractive relative to their historic standards.”

Steve Cordell, who took over management of Cazenove European from Chris Rice last month after Rice left Cazenove, is concentrating his portfolio on domestic-facing stocks in the hope of a eurozone recovery.

However, there are differences between the portfolios. For example, Taylor has significantly more allocated to industrials than Cordell, while he has much less exposure to consumer goods.

In addition, Invesco Perpetual European Equity also has more allocated to Spain than Cazenove European and less exposure to ‘safer’ nations such as Germany and Switzerland.

Brookes and Robin McDonald add: “To us, opportunity exists in selective areas of value in areas such as Europe and Japan where markets are not reaching all-time highs as experienced in the US during the quarter.

“To reiterate previous notes, some of the more defensive, ‘quality’ areas of markets look fully valued to us at this stage and we are beginning to see the tentative signs of markets coming round to our way of thinking.”