Search this website. You can use fund codes to locate specific funds

EUROPEAN ALPHA EQUITY

Aiming to achieve long-term capital appreciation by investing primarily in a diversified portfolio of equity and equity-related securities with a European bias (including Russia and Turkey) quoted or traded on Regulated Markets.

Image

Our high-conviction stock selection exploits the power of change over the long term

James Rutherford

Head of European Equities

Truly active

Our high-conviction approach results in a portfolio with very different stock weightings to those of the benchmark, generating a consistently high active share.

Power of change

Markets behave as if change has a short-term and linear effect on a business. However, companies can see long-term, exponential outcomes. This mismatch creates an enduring market inefficiency.

Enduring quality growth

We look for companies with a persistent competitive advantage underpinned by franchise value, balance sheet strength and revenue generation, putting them in control of their own destiny.

Proven record

Portfolio manager James Rutherford has been managing European equity portfolios for more than 20 years. This experience has helped underpin the strategy's outperformance since inception1.

Investment approach

Change is systematically under-appreciated by investors. Most stock analysis is linear, but in reality we live in a non-linear world. As a consequence, change can lead to dramatic geometric expansions in stock valuations, as changes persist for longer than most investors expect.

We take a bottom-up approach to investing, with stock selection the key driver to returns and the dominant source of relative portfolio risk. Our emphasis is on identifying companies or industries undergoing longer-term structural change. Even when a stock decision has a strong thematic element, the fundamental qualities of the company take precedence, and stocks only enter the portfolio on their own merit.

Focus on long-term growth

Our high-conviction approach ensures that stocks are only bought when there are clear insights into factors that will generate positive change in the business and that will persist over time.

Markets generally value companies in a short-term and linear fashion. We look for companies that can deliver long-term compounding growth to their shareholders.

  1. 1Since inception on 18 June 2007 the Hermes European Alpha Strategy has outperformed the FTSE All World Europe Index by 2.53% on an annualised basis as at 30 September 2018. Performance shown is in EUR and is gross of fees. A full GIPS disclosure report is available on the latest strategy factsheet.

Past performance is not a reliable indicator of future results and targets are not guaranteed.

Our Fund Finder

Team

No posts matching your criteria

Related Insights

The waiting game - four turnaround stocks in Europe
Stock markets are capricious in the short-term. Unexpected news flow and temporary factors can trigger bursts of share-price volatility, but leave the long-term fundamentals of companies intact. This is illustrated well by the performance of Pandora, ConvaTec, Nokia and Siemens Gamesa in the last year. While European equities rebounded strongly in the past 12 months as the region’s economic recovery deepened, these four stocks faltered. James Rutherford, Portfolio Manager and Martin Todd, Co-Manager, Hermes European Alpha, at Hermes Investment Management explain why they decided to retain – or add to – these positions and maintain focus on the companies’ prospects for long-term growth. “We aim to not be driven by emotion, but instead examine adverse issues influencing a company’s performance. We seek to understand the nature of these issues – for example, whether they are structural or temporary – and whether we can see a clear road to recovery. This requires discipline and patience, and ultimately helps us look beyond short-term turbulence and keep an evidence-based faith in the ability of our holdings to outperform.”
Keeping The Faith: Four Turnaround Stocks In Europe
Four holdings in the European Alpha Fund missed out on a share of the spoils in 2017 – a vintage year for European equities – as they were pummelled by temporary pressures.
European equities revisited- The outlook remains bright
A year ago, amid widespread scepticism, we argued for a renaissance in Europe. In 2017, the eurozone recorded its fastest rate of economic growth in a decade, confidence soared and stocks rallied. Today, Martin Todd, Co-Manager, Hermes European Alpha at Hermes Investment Management, revisits the case for European equities and asks: is the future still bright for the region? Europe entered 2017 against a backdrop of political uncertainty. Many investors feared anti-establishment electoral threats as the region braced for a slew of high-stake elections in the UK, Germany, the Netherlands and France. At the same time, we argued in favour of European equities in our commentary, “Why European equities?” The central premise was that the market provided attractive opportunities given that negative sentiment overshadowed the region. We also highlighted that companies are not the economy or the politics of any nation.
European equities revisited: The outlook remains bright
A year ago, amid widespread scepticism, we argued for a renaissance in Europe. In 2017, the eurozone recorded its fastest rate of economic growth in a decade, confidence soared and stocks rallied. Today, we revisit the case for European equities and ask: is the future still bright for the region?

Sales Contacts

Angelo Natale,
Director - Business Development, Italy
Paul Voute,
Head of European Business Development