The European bank review set to be carried out by the ECB will fail to provide any meaningful results and the necessary long-term visibility to encourage investment in the sector.
That is the view of Citywire AAA-rated manager Franz Weis, who currently has zero exposure to banks across his four European equity funds.
Speaking to Citywire Global, the Comgest manager said the forthcoming Asset Quality Review (AQR) would not provide any results to change his mind about banks.
‘If you cannot understand what is driving profits and don’t have the visibility about what is going to create growth then, even if it is in the index, we don’t feel obligated to be invested in it,’ said the Paris-based manager.
‘Over the years we have lost count of the number of stress tests. Perhaps we have some downside protection from this but it won’t help us understand where profits will be in five years’ time.’
The long-term, buy-and-hold specialist said he has centred his efforts in health care, which is the top sector selection across all four of his funds, while also locating selective stock picks in strong growth industries, such as IT.
Weis said one of his latest additions was German events company CTS Eventim, which he has opened as a 2.5% position in the Comgest Growth Greater Europe Opportunities Euro fund.
‘It is one of the most recent companies we have added, which has moved out of just Germany to become a European market leader in ticket sales,’ said Weis.
‘They are rolling out their products at a time when more and more events are marketed and sold online rather than at venues.’
The largest positions in the Comgest Growth Greater Europe Opportunities fund at present are Dutch IT company Gemalto (4.7%), French health care firm Eurofins Scientific Société (4.4%) and luxury goods company Dufry (4.3%).
Weis said Dufry has benefited from a contract win to be the duty free provider at Sao Paulo airport's new terminal, as well as some improved business conditions in the Brazilian market as a whole.
The influence of the BRICs on the European equity fund was also noted in the holding of Russia company Yandex, which is the Russian equivalent of Google.
‘It is followed very closely by our emerging market colleagues. Yandex is holding a greater market share than Google in the Russian market,’ said Weis.
‘They have a definite cultural advantage there and Yandex is also benefiting from a trend of increased internet use and internet marketing in the country, which is currently lagging behind other markets.’
The Comgest Growth Greater Europe Opportunities Euro fund has returned 62.6% over the three years to the end of September 2013. This compares to a 31.2% return by its Citywire benchmark, the FTSE World Europe TR EUR, over the same period.