Despite this being a difficult time, he is adamant that if investors take a two or three-year view, there is an opportunity to pick high-quality companies in sectors that are likely to see growth. This growth will come from structural changes such as demographic trends or technology improvements.
He accepts that during the next two years European growth overall will be modest. The UK will still be trying to work its way out of Europe, France and Germany are due to hold elections and Italy will be dealing with the mountain of debt in its banking system. Once these events have passed, says Brown, the region should pick up.
“I think Europe is going to de-risk over the next 18 months and, two years on, things will be better still,” he says.
Progressive thinker
Brown admits he was surprised by Britain’s vote to leave the EU but does not see it having much impact on his overall portfolio. “Going into it we weren’t taking a huge bet either way, and that was important.”
His focus was on the vote’s impact on the rest of Europe, rather than simply the UK, and he found it encouraging that financial markets quickly priced in the outcome and stabilised again.
“Friday 24 June was a hell of a day, but everything functioned,” he says, predicting that any difficult situations on the European stage in the near future will be handled in a similar manner. He certainly does not anticipate a crisis of the kind seen back in 2008.
“There will be some very big events but I am expecting them to be approached sensibly. Bank balance sheets are in a wholly different situation now to where they were then. Political systems are entirely different and investors are much better prepared.
“We are at a point now where there are a number of things that could happen, but we’ve seen, with the Spanish election for example, that people will often go with the status quo and focus on growth.”
Outside of these political risks, Brown is concentrating on identifying the emerging trends and long-term themes that are changing the world and he is seeking out the investment opportunities they create.
Responsible beginnings
Brown’s fund is part of a Luxembourg Sicav that aims to achieve capital growth through investing in a broad range of shares in pan-European companies. It is biased towards firms that focus on sustainable products and services, and that take a progressive approach to the management of environmental, social and governance issues.
Brown’s interest in social and environmental issues was sparked in childhood. His father was a civil engineer and the family lived next to the sites of the major infrastructure projects he worked on.
“I was very interested in two things from a young age,” says Brown, “one was the way in which the people working on the sites were treated – it’s very dangerous work – and then there was the economic growth aspect.
“We still wrestle with health and safety issues at our own mining companies, making sure we have the right companies to begin with. The idea is that if you treat people and communities correctly, and treat your clients and customers correctly, you will get the job done and be a better business.”
