A focus on “next generation” companies rather than value stocks has been key to turning around the performance of the former Crux European Specials Situations fund, according to its new manager, Daniel Avigad of Lansdowne Partners, which acquired Crux Asset Management in 2023.
At the time Avigad took over the fund, which had previously been run for many years by Crux Asset Management founder Richard Pease, it had underperformed relative to the IA Europe Ex UK peer group over the previous three year, according to data from FE Analytics.
The fund is now named the TM Lansdowne European Special Situations fund, and is top quartile since Avigad took the helm.
He says that while many focus on the lack of large technology companies in Europe relative to the US, he believes Europe has an advantage over the US and the rest of world when it comes to businesses that derive their activity from what he calls “mechanical and materials engineering.”
Avigad says many companies in Europe use their knowledge in this area to develop new products, “but the key is that, this isn’t venture capital, the innovation is happening inside large well known companies and in areas such as energy efficiency. A lot of these companies have focused their resources on developing new products, rather than just on share buybacks, it's a different model in Europe, but it tends to mean the companies, because of their spending, have better moats {that is protection from competition.}
He acknowledged that the regulatory environment in Europe is not always helpful to shareholders, but said many of the areas of innovation concern energy efficiency and so don’t conflict with the goals of the economic bloc.
Lansdowne had already secured the necessary regulatory permissions to launch UCITS funds in the UK, when it bought Crux.
David.Thorpe@ft.com
