Polar Capital has revealed the details of its new European income fund which will be managed by former Threadneedle manager Nick Davis.
The new fund is a Ucits sub-fund listed on the Irish stock exchange. Applying a bottom-up stock picking approach, it will invest in a selection of 30 to 50 mid- to large cap stocks with a market capitalisation of at least €1bn and no more than 20% of the net asset value of the fund will be in companies with market capitalisation below €3 billion.
Davis commented: “Our investment approach is based on the main inefficiency in the market which is the time horizon. This is driven by two main factors; the first is investors being influenced by what we call short-term noise, such as macro data points, and secondly a general under-appreciation of the impact of compounding.”
“We look to identify investment opportunities which are mispriced, either reflecting excessive short-term pessimism for strong franchises or a failure to price in the duration or reliability of future compounding earnings. We do this by detailed analysis of a company’s use of cash, carrying out due diligence on their business model and financial accounts,” he added.
Davis joined Polar Capital last month, prior to that, he ran Threadneedle’s European and Pan-European Equity Dividend funds.
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