Turnaround of Johim European fund's performance attributed to manager Katrina Norris's best-ideas approach
Katrina Norris took over as lead manager on the JO Hambro Investment Management (Johim) European fund in January and her best-ideas approach has had a positive impact on performance.
Norris took over the pan-European vehicle from Alex Pritchard, who continues to run the Pepin hedge fund for Johim, and has moved it up the peer group in performance terms over three months.
Norris joined Johim in October 2006 as a European specialist. Her career includes stints at Morgan Grenfell Asset Management, where she ran two hedge funds.
She said: "I am running a best-ideas portfolio driven by fundamental analysis of the stock markets. I carry out cashflow analysis rather than being an earnings junkie.
"There may be a catalyst in a company after something has changed but I primarily look at stocks that have been overlooked by the market."
Most recently, the £64m fund has shown a bias towards large caps and Norris particularly likes luxury brands such as Reichmont and Swatch. She believes in the wealth effect and the fact people are getting richer and want to display this through buying brands.
Reichmont has a large exposure to watches and jewellery. It is currently trading at a 20% discount to its peers, which is unjustified according to Norris.
The Swatch Group is the largest portfolio position at 4.29%.
Norris said: "This is a pure play on the watches business. Swatch owns the largest supplier of watch components and therefore has control of the market. It has offered very strong returns from this."
Holcim, a Swiss cement manufacturer, is also included in the portfolio as Norris believes the company has strong cashflows and a stable growth outlook as well as good exposure to India, China and Europe.
"Pricing remains robust globally and I increased exposure in the recent sell-off," she added.
Due to concerns about short-term valuations, the fund is currently defensive as Norris is worried about credit in the US and thinks further market turbulence is possible.
The fund is not restricted to large caps and Norris said she is perhaps too generous with the description.
"I call large-caps anything above the g5bn market cap so it is not just huge players in the portfolio," she added.