Schroders, the UK-based asset management firm, have announced the launch of the ISF European Total Return.
The specialist fund is designed to offer investors increased access to long-term capital growth, as well as lowering the targeted volatility of those returns.
Rory Bateman, Head of European equities at Schroders, suggests that the company has recently seen an increasing demand for a European equities product with the ability to limit non-stock specific risk, considering the volatility across European markets presently.
The new fund will be managed primarily by Nicholette MacDonald-Brown, Senior Portfolio Manager on the European equities team. Her principal role will involve the selection of stock while attempting to lower volatility by adjusting the fund’s exposure to the market.
This will be done mainly through the tactical use of fixtures, derivatives and cash.
The move from Schroders is in line with a pattern of money being pumped back into equity funds during 2012, with many analysts predicting that this trend will continue. Skandia recently stated that they expected a “wall of money” to flow back into this area in the coming year.
iShares, Blackrock’s exchange-traded funds arm, have warned caution in this practice and encouraged companied to focus their attention mainly on Northern Europe.
“With the European crisis dragging on and Europe likely to experience at least a mild recession this year, stocks in the region have become very cheap. We still, however, continue to hold a neutral view of the region overall and to advocate avoiding large parts of Europe – particularly Spain and Italy.
“Much of Northern Europe arguably represents a good value for long-term investors when you consider these countries’ current valuations, relative growth prospects and perceived risk.”
Schroders clearly feel that the European equity markets could be potentially highly lucrative, only time will tell if they have got their instincts and their sums correct.