We seek to outperform the MSCI Europe index over a full market cycle by investing in European equity securities that we consider undervalued relative to their growth potential.
We believe that the market does not always reflect the true value of a security and that certain stocks whose price-to-cash earnings ratios are low relative to their long-term growth rates can produce superior investment returns over time.
The investment decision-making process is a disciplined, research driven, bottom-up process, which leverages the network of GE resources. Our investment process begins by screening the universe of European companies with market capitalizations greater than $500 million. We conduct quantitative analysis focused on Price/Cash Earnings Ratios, Cash Earnings Growth, and Yield. Detailed, fundamental company analysis, industry competitive analysis, and a macro-environment review including an assessment of currency risk further narrow the list of buy candidates. Our analysts then seek a catalyst for change in each stock that will unlock the future potential of the company. Such catalysts may include: the introduction of a new product, a corporate rationalization/restructuring, or participation in new markets. The final portfolio construction is driven by the portfolio manager’s level of conviction in each stock, with the goal of constructing a concentrated portfolio of European mid- to large-capitalization companies that offer above average, high quality earnings growth potential. The strategy is based on the belief that companies that can achieve a proprietary edge, as well as sustain differentiation or competitive advantage, can deliver high-quality, predictable earnings growth and above average returns as compared to the market over the long-term.
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