When people consider tech giants, few alight on ASML. The Dutch plc describes itself as ‘the most important tech company you've never heard of’, even though it’s Europe’s most valuable technology venture.
ASML makes the machines that inscribe integrated circuits on silicon wafers, and its customers are the world’s major chipmakers. Business is booming, with the company booking a net profit of €1bn on sales of €4bn in the latest quarter.
ASML is coming down with cash, and recently announced an increase in its share buyback programme from €6bn to €9bn. Though the company flies below the radar, investors are up-to-speed, with the share trading on an historic p/e of 76 and a forward p/e of 38.
Market cap has increased by a factor of six over the past five years, a share performance more usual for tech companies on the other side of the Atlantic.
The eurozone’s other largest caps – LVMH, SAP, Siemens, Sanofi, L’Oreal, Total Energies, Allianz, Schneider Electric and Air Liquide – aren’t on the same type of roll as ASML, but there is a view that European shares are back in favour with global investors.
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It’s partly to do with the valuation gap compared with US peers, but also due to expectations of 4.3% annual growth across the eurozone this year.
At Zurich, Richard Temperley, Head of Investment Development, says the fund manager is underweight US equities but is positive about prospects for UK and Europe stocks. Zurich’s Eurozone Equity Fund, with c.€120m under management, recorded pre-charges growth of 16.2% through H1, and the 5-year annualised return is 12.2%.
The fund’s in-house stock pickers have mostly loaded up with the large cap giants mentioned above, and the fund has benefited from improved market sentiment surrounding the largest industrial players on the continent.
Evergreen Fund Reaches Half Century
The compound power of fund investing is illustrated by New Ireland’s Evergreen Fund, which was launched 50 years ago and is Ireland’s longest running managed fund.
The company, owned by Bank of Ireland, says that €10,000 invested in Evergreen in 1971 would now be worth c.€600,000. To keep pace with inflation in the half century, the €10,000 investment would have had to appreciate in value to c.€130,000, so long-term Evergreen investors are well ahead.
When we last reported on the fund in May 2018, the fund size was €670m. It’s currently c.€590m after the fund was marked down sharply in the pandemic panic of March 2020.
On the 50-year view, New Ireland says the pre-charges fund return has averaged 8.5% p.a., and year-to-date fund growth of 10.4% has been in line with the sector.
Fund manager State Street has c.60% of the fund exposure in equities, half of them American. Top picks three years ago included Cisco, Intel, Microsoft, Oracle, Skechers and Wells Fargo. Cisco is still favoured and now in the top ten holdings are Discovery, Cognizant, Omnicom, Continental, BMW and SAP.
A quirky Evergreen feature is the eclectic property holdings, which account for one-fifth of fund value. These include properties in London, Paris and Amsterdam (pictured), as well as in Dublin at George’s Dock and on St Stephen's Green.
CHRIS SPARKS
