The Baring European Opportunities Fund, which will be benchmarked against the MSCI Europe Small Cap Equity Index, will be co-managed by Nick Williams, Barings’ head of small cap equities, and Colin Riddles, an investment manager in Barings’ small cap equity team.
According to Barings, the European smaller caps sector is substantially under-researched compared to larger cap stocks.
Supported by the firm’s in-house research team and analysts, the fund will select stocks from around 7,000 European companies to create a portfolio of around 100 individual holdings.
Barings says that it applies this investment philosophy to its other long-running fund – which Williams also manages – the Baring Europe Select Trust, which seeks to identify other mispriced opportunities.
Baring Europe Select Trust invests in smaller European companies (although not UK-based ones) and has ranked first quartile amongst its Morningstar peer group over the past three and five years and second quartile over one year, as of 30 August.
According to Williams, while European equities have languished behind other markets due to investor caution over the prospects for European economic growth, there were still “exciting opportunities” to be found in smaller companies which the European Opportunities Fund seeks to identify.
He said: “Recently there has been an improved sentiment towards European equities, and while we have seen gains in European and UK smaller companies we believe there remain interesting stock opportunities for us to identify,” he said.
He added: “There are clear investment opportunities which, given our strong experience in the asset class, and proven investment process and research capability, we will aim to realise for the Baring European Opportunities Fund."
The minimum investment in the fund, which is set to launch in the coming weeks following regulatory approval, is €3,500 with an annual management fee of 1.5%.