Eric Bendahan’s decision to retain a value bias in his €1.2 billion Eleva European Selection fund has helped the boutique founder overcome the ‘brutal’ market movements that hindered his early-year returns.
Speaking in the summer of 2016, Bendahan said he had added to under-fire investments during a ‘brutal’ market for European equities and he had initially reduced some of his value exposure.
However, speaking to Citywire Selector this month, the Citywire + rated Bendahan said he opted to keep value investments at around 60% of the portfolio, which proved beneficial in the second half of the year.
‘When those kind of brutal markets happen we try to look at the market, look at valuation, take a step back and see if it opens up some opportunities. Fortunately we kept this value bias which affected us in the first half but has allowed us to do better into the second half.’
One area Bendahan has added to is financials, which rose from 19.3% of the fund in March 2016 to 23.2% as at the end of January 2017. This included adding two financial stocks over the course of January.
‘As a whole I tend to have much more of a value bias than I have historically and we have warmed up to the financials sector and the banking sector,’ he said.
‘We should be comfortable with being overweight and our mindset is to add to our exposure whenever we find some opportunities and banks, while a volatile sector, have had opportunities there.’
Bendahan said the core part of his portfolio is composed of high-quality franchises, which he said are doing well in terms of revenue generation.
'We have a few newcomers, such as FinecoBank, which is something we like in those value sectors, as we find some uniques and niche ideas,' he said.
'Also, we recently participated in the UniCredit rights issue, so we are ready to take a bit more risk. At least in this specific investment case because we believe the company is changing and the rights issue was there to help address the problems left accumulated by the recent past years.
'Overall, we have become more positive on the banking sector than we have been for a while,' Bendahan added.
In the 25 months since it was launched, the Eleva European Selection fund returned 12% in euro terms to the end of January 2017. Its Citywire-assigned benchmark, the FTSE World Europe TR EUR, rose 4.4%.
Eric Bendahan discusses current positioning and his emphaiss on value investing in the portfolio.