James Hanford, portfolio manager at Paris-based Comgest, a growth investor, discusses the investment scene in European equities, and highlights his top stock picks.

In a recent interview with WealthBriefing, James Hanford, portfolio manager at Paris-based Comgest, highlighted the success behind the Comgest Growth Europe ex UK Fund.

The firm’s investment philosophy is based on investing in a few high-quality long-term growth firms that can generate consistent returns in the long term, and which are insulated from macroeconomic trends because they are plugged into structural growth trends, and have strong fundamentals.

Factoring in ESG criteria into investments is also important for the firm because most of its funds come under Article 8 of the EU’s Sustainable Finance Disclosure Regulation.  

Comgest’s Growth Europe ex UK Fund, which has £265.1 million ($336 million) assets under management, has returned 238.5 per cent since its inception compared with 177.5 per cent on the MSCI Europe ex UK index, Hanford told WealthBriefing. It concentrates on healthcare, consumer discretionary, IT, industrials and consumer staples, and is heavily weighted in France, followed by the Netherlands, Ireland, Switzerland and Denmark.

Its top holding is Dutch firm ASML in the semiconductor industry, providing chipmakers with what they need through lithography. It is well positioned for the long term given that semiconductors play a key role in driving tech developments in super computers and generative AI, Hanford said.

Another top holding is Danish pharmaceutical company Novo Nordisk, which he believes is shielded from macroeconomic downturns as healthcare spending remains consistent. The firm excels in diabetes care and has developed a new anti-obesity drug Wegovy which has helped to make it a valuable company in Europe.

Hanford also believes that Europe has strong investment opportunities in the luxury industry. The continent has several strong international brands which gives them strong pricing power, he continued. These companies are tapped into the international market as well, especially the growing middle class in China, he added. He cited L’Oréal as a key example, the French powerhouse which is still growing, and whose market share has increased from 10 per cent to 15 per cent in the last 20 years. Its earnings per share have also grown by 11 per cent per annum for the past 40 years, he added. Another top holding in the fund is EssilorLuxottica, which produces optical lenses for spectacles and sunglasses.