John Bennett, manager of the £280m Henderson European Focus trust, has explained why he continues to adopt an increasingly value-biased style, despite this approach "not being a good idea over the last 18 months".
The manager has returned 12% over the year to 14 February in share price terms, but this remains in line with its FTSE Europe ex UK benchmark and behind its AIC Europe sector average of 19%, according to FE.
Bennett said this is due to markets over the past decade favouring growth stocks, and in particular he pointed out investors would have fared better investing in small-cap growth stocks since mid-2016, rather than a large-cap value strategy.
"Why would you want to be a value investor now? I have - you may say somewhat recklessly - tilted my fund towards value in the last 18 months and that was not a good idea," he said.
"However, it seems to me we are now reaching a crescendo in growth."
Bennett, who also runs the open-ended £440m Janus Henderson European Focus fund, highlighted the positive turn for value stocks year-to-date, including the recent success of European banks - of which he holds ten in his trust portfolio, including ABN Amro and Nordea.
He said: "Banks are pretty hated but that has been a nice contrarian call we got right. They are the poster child of European value investing and we have found joy there."
The manager also said rising interest rates and inflation are more favourable to value stocks.
"We do not want bond yields to sink so I am very grateful to Bank of England Governor Mark Carney for suggesting rates may rise sooner than anticipated. The world has priced in a deflationary environment and I have always been taught not to commit capital to something that is already priced in.
"I am not the one to say when, but inflation is definitely coming. People are already paying top dollar for pricing power companies so if we get even a modicum of an uptick in inflation in this synchronised growth world, the money tied up in certain asset classes is not prepared for that."
"That is why we tilted towards value, though I must admit apart from the time during the Trump bump and the last four to six weeks, it has been miserable," he added.
Nonetheless, Bennett said he is not worried about short-term performance and he is pleased with his longer-term track record.
He said: "There are managers who have been running money for two or three years having a great time and now they think they are Warren Buffett. But the world will turn soon enough and it is about how they fare from setbacks that will make them champions.
"My five-year numbers are not embarrassing, it is decent alpha. It is bread on the table for the client, which at the end of the day is what we are here to do. I will never believe I am the best. If you think you are that good, that is the kiss of death."
Over five years to 14 February, the trust is up 108%, ahead of its FTSE Europe ex UK benchmark return of 63% and its AIC Europe sector average of 90% during the period, according to FE. It is currently trading on a premium of 1.8%.