Investment: The new giants grow in Europe

PATRICIA MAXWELL-ARNOT came to the fund management business by accident. "My father was a publisher and I was thinking more in that line, although the City has been more rewarding. I read politics and economics and, like a lot of people do, had one or two temporary jobs, while I made up my mind.

"I was working for a holding company at the time of Slater-Walker when there were lots of holding companies. It was run by a stockbroker and I was a market researcher. He told me about this thing called `investment analysis' and made the classic statement that `women are rather good at it', which intrigued me. He introduced me to a book about the City called The Money Game, and I read it and I was riveted."

Her first City job was with what was then the fund- management subsidiary of Barclays Bank. "I covered all sectors of the UK market, and in 1982 I started looking at Europe." Ms Maxwell-Arnot was then at Rothschild's. She has been at Credit Suisse since 1995, joining from Lazard's to head the group's European team and launch the Credit Suisse European Fund.

"I was 10 years at Lazard's and 12 years with Rothschild's. They were heady days when I started investing in Europe, because there was a lot of ARISSA (US pension fund) money flowing from the States, and Europe was beginning to take off. Everything was cheap and under-researched, which was paradise for a fund manager. There was a huge conservatism in European companies. Having followed stocks such as Rolls-Royce and seen what could be done by a change in management attitudes, I could see a lot of scope in Europe."

Ms Maxwell-Arnot's approach to fund management is founded by a desire to keep risk to a minimum. "I have always been a risk-averse investor and one tries to beat the indices and limit the risk. This meant investing in bigger companies, which made life interesting when smaller companies were all the rage."

This helps to explain why the overall performance of the Credit Suisse European Fund has been steady. It has also suffered, in common with most unit trusts investing in Europe, from a general downturn in continental markets (the average performance for the Europe Excluding UK sector to 23 August over one year is a fall of just under 2 per cent).

She says: "We took the view late last year that there would be a global recovery, which was premature, but we felt there would be strong growth in the three main areas of the world (the US, Europe and the Far East). So we began shifting the portfolio into cyclical stocks, away from defensive stocks. Some areas, such as automotives, have been slow, but others, say Lafarge, the cement producer, have performed very strongly." With the single currency and moves to a single European market, many investment houses have been reorganising to operate on Pan-European lines. Patricia Maxwell-Arnot runs Pan-European and exclusively Continental European portfolios at Credit Suisse, but says her unit trust is a traditional non-UK fund. "It is primarily addressed to people who have UK exposure and want continental European companies in their portfolios. Most who want Pan- European funds are investors in the US or Japan."

The fund has a large-cap bias and does not hold unlisted stocks. France accounts for the largest part of the portfolio (26.8 per cent) followed by Germany (20 per cent), the Netherlands (15.1) and Sweden, Switzerland and Italy (10 to 11 per cent each).

The portfolio has 41 holdings, most of a similar size. The largest - Swiss pharmaceutical Roche - has 3.57 per cent, others such as Royal Dutch Petrol (3.48), Lafarge (3.46) and Swedish telecoms giant Ericsson (3.17).

"Europe now has giants to rival the US - look at the proposed merger between Carrefour and Promodes. We want to hold the big stocks that will dominate Europe. We are creating the new global giants here - Carrefour/ Promodes will be second only to Wal-Mart globally. There are good managements in Europe and, for once, they are not just still in the race, they are actually gaining ground."

Fundamental facts

Fund Manager: Patricia Maxwell-Arnot

Age: 51

Fund: Credit Suisse European

Size of Fund: pounds 210.24m

Fund Launched: January 1995

Manager of Fund: Since launch

Current Yield: 0.00%

Initial Charge: 5.25%

Annual Charge: 1.5%

Current Bid/Offer Spread: 5.51%

Minimum Investment: pounds 1,000 (then pounds 500)

Minimum Monthly Savings: pounds 50

Standard & Poors' Micropal Rating (maximum KKKKK): KK

Fund performance (to 9 August 1999, offer-to-bid with net income reinvested):

One Year 3.14%

Two Years 20.89%

Three Years 49.52%

Since Launch 120.25%