Ng said that the Barings team seeks out mispriced stocks that could potentially reverse their performance within a year. Ng noted that Williams and his team of analysts maintain a strong sell discipline as well. They will downgrade stock ratings when mispricing opportunities have closed off or if the stock’s performance has not turned around within their expected timeframe.
“In addition, Williams places profit-taking and stop-loss measures to guide the team’s selling decisions,” Ng said.
Williams takes into account the macro-economic environment in his portfolio construction process and he tends to maintain a portfolio of 80 to 110 stocks.
In contrast, the Parvest product, which is managed by Damien Kohler, is measured against the MSCI Europe Small Cap index. Unlike the Barings fund, Kohler invests around 40% into UK smaller cap companies.
Kohler and his team adopt a bottom-up selection process that starts with an eliminative quantitative screen, dropping stocks that are illiquid and companies with inferior growth prospects.
The team meets with management of selected holdings to judge whether they can deliver on their business strategies. Based on that, he will determine the target selling price of a stock.
Kohler favours a high-conviction approach. He aims to maintain an active portfolio of 60 to 90 stocks.
Ng noted that Kohler invests with a long-term view and that he prefers large-cap companies.
A snapshot of the two funds:
| Baring fund | Parvest fund | |
| Launch | August, 1984 | September, 2007 |
| AUM | £1.3bn | €945.18m |
| Number of holdings | 101 | 63 |
| Top regions |
France – 16.6% Italy – 14.5% Others – 11.9% Germany – 11.8% Switzerland – 11.7%
|
UK – 42.8% France – 10.4% Switzerland – 9.45% Ireland – 7.25% Germany – 6.98% |
| Top sector |
Financials – 20.7% Business providers – 18.4% Industrials – 16.4% Consumer goods – 14.1% Technology – 8.3% |
Industrials – 23.0% Consumer discretionary – 17.5% Finance – 15.5% Materials – 14.6% Information technology – 11.2%
|
| Top holdings |
Elisa – 1.7% DSV A/S – 1.6% Recordati – 1.6% Christian Hansen – 1.6% Kingspan Group – 1.5%
|
Ashtead Group – 3.33% Barrat Development – 3.22% Hikma Pharmaceuticals – 2.86% DCC – 2.57% Ingencio – 2.51% |
Source: FE Analytics
