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A-rated manager reveals best ‘unexciting’ outperformers

A-rated manager reveals best ‘unexciting’ outperformers

Investors who write off the Swiss equity market as unexciting or lacking turnaround stories are missing out on substantial returns, according to Daniel Häuselmann.

The Citywire A-rated manager, who runs the Julius Baer EF Swiss fund, said investors should overlook the strength of the Swiss franc, as it forces companies to stay competitive in the global market.

‘Nestlé outperformed the index by 200% over the last 20 years, it is amazing, it is a very unexciting story that can deliver a good return.'

'This is the problem you have with the Swiss market, I can never tell you sensational stories, like the economy is going down and you can play the turnaround,’ he told Citywire Selector.

Around 50% of the Swiss index is dominated by three names and these are some of Häuselmann’s largest holdings. He has 8.78% of the fund dedicated to Nestlé, 7.14% in pharmaceuticals firm Novartis and 7.69% allocated to healthcare company Roche.

Häuselmann also said there are opportunities away from these firms in the mid-cap space, such as computer accessories company Logitech, which is the fifth largest holding in the fund at 5.85%.

In terms of sectors, healthcare is the largest allocation at 28.6% of the fund, as Häuselmann said its full of small- and mid-cap firms. 

He said these are market leaders in their respective fields, such as pen injection manufacturer Ypsomed, dental implant producer Straumann and hearing aid company Sonova.

‘They were early in globalising their companies, being patient in getting into new markets and staying in these markets during difficult times. During the upswing they gained further market share,’ Häuselmann said.

Bitter sweet

Häuselmann has a small position in chocolate producer Barry Callebaut and is underweight in Lindt, the only other listed Swiss chocolate company. Lindt made a push into the US market and is now starting to see results.

‘It was a big mistake not having a higher weight of Lindt in the portfolio. In the last months it underperformed, but I wouldn't exclude this company appearing stronger again in the portfolio.'

'If you ask me one company I hold regrets about in the fund it will be Lindt. It was always a bit expensive, but they are doing an excellent job,’ he said.

‘20 years ago Lindt initially had three markets: Germany, France and Italy. When they started they gave the licence to foreign companies to produce the chocolate then they took over these markets.'

'They are now a market leader in premium chocolate in the US. They are a global market leader in this business and they have a very long term strategy.’

Over three years to the end of August 2016 the Julius Baer EF Swiss fund returned 2.46% in Swiss franc terms. This compares to a 0.99% rise by its Citywire-assigned benchmark, the Swiss Performance Index TR, over the same time frame.

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