Improving European Models SRI: a quality value fund in line with our SRI approach

30 March 2022

1- How is this new fund positioned in the Montpensier Equity range?

Since 2021, our European large and mid-cap equity range has covered the three main SRI equity management styles:

– Great European Models SRI, a Europe Growth SRI fund, seeks to select the gems of European growth

– Best Business Models SRI, a Euro Blend “All Weather” SRI fund, looks for earnings growth and a good balance

– And Improving European Models SRI, a Europe Value SRI fund, combines quality and attractive valuation

Improving European Models SRI is the latest addition to our range.

It is a quality value fund in line with our SRI approach. It capitalises on the DNA and expertise of Montpensier Finance. Our objective is to focus on companies that are generally less expensive than the market and that show profitable growth.

2- Explain the “Improving Models” method to us…

IMPROVING EUROPEAN MODELS SRI is a fund that seeks to combine attractive valuations with steady earnings momentum (“Steady Improvers”) or reversal (“Fast Improvers”)

– “Steady Improvers” are companies that generate high free cash flow, with a lower valuation than the market. They offer a steady momentum of earnings improvement.

– “Fast Improvers” are companies whose earnings momentum will accelerate for two reasons:

A catalyst such as a repositioning of the business portfolio, or a change in management, will lead to a revaluation of the stock

A phase of economic recovery will allow companies at the bottom of the cycle to benefit from a revaluation. 

Finally, IMPROVING EUROPEAN MODELS SRI has obtained the SRI label since its creation. We are looking for “Improvers” in the economic field and also in the field of ecological and solidarity transition.

3- Which themes are currently highlighted in the portfolio?

The climate transition is an absolute priority. Companies are at the heart of the issue of reducing CO2 emissions. We are therefore looking for “improvers” in certain sectors

  • utilities, which are essential for the production of electricity from renewable energy
  • Construction, with ambitious building renovation targets in Europe,
  • transport, with manufacturers of electric vehicles or charging infrastructure

Banks and insurance companies will have a role to play in financing this energy transition. The sector’s momentum has been good in 2021 and, barring any escalation, we believe that the Ukrainian crisis should be absorbed and dividend payments maintained. In addition, persistent inflationary pressures are forcing central banks to raise interest rates, which we believe is good for the sector.