SYZ Asset Management, the asset management arm of SYZ Group, has expanded its range of high-alpha European strategies with the launch of the OYSTER Continental European Income fund.
The new fund will seek to generate income from under-invested areas in European markets (ex-UK). The Luxembourg SICAV fund will be managed by SYZ Asset Management’s head of European equities, Michael Clements.
The income strategy of the OYSTER Continental European Income fund targets a yield that is at least 10% above that of the index (MSCI Europe ex-UK). The fund arrives on the back of increased demand from investors, who have struggled to find quality yielding solutions. SYZ’s London-based European Equities team has successfully managed the OYSTER Continental European Selection fund since 2014, returning +48.3% over three years compared to the MSCI Europe ex-UK index, which returned +32%.
The new strategy applies a similar investment approach to the OYSTER Continental European Selection fund: an all-cap, high-conviction and contrarian portfolio that seeks to generate consistent alpha from rigorous bottom-up stock selection and fundamental research. However, as the new fund is aimed at investors seeking an income as well as capital growth, the fund will also apply a further element to the process, identifying companies that deliver a sustainable and growing dividend.
Since the financial crisis, income investors and asset allocators have had to contend with record-low interest rates. This fund is designed to provide an attractive alternative equity income source in a market where many traditional income sources are widely held and could be considered expensive in terms of valuation.
Michael Clements, head of European equities at SYZ Asset Management, explained: “Across our European high-alpha range, we focus on top-quality companies that have long-term competitive advantages, but where valuation may be reflecting short-term pressures, or negative sentiment towards the company or the sector in which the company operates. The new strategy now also allows income investors to harness our time-tested approach and gain access to underinvested areas.”
Clements added: “Most European income funds focus on traditional high-yielding sectors, such as utilities and telecoms. However, we have a different perspective, which often leads us to contrarian positions in less obvious areas. This fundamental long-term approach aims to deliver a consistent steam of yield, but also an attractive diversification element compared to existing income funds.”