Citywire Selection: SR Europe removed after Dyson departure

With the departure of Rupert Dyson as manager, we are removing the £55 million SR Europe investment trust from Citywire Selection, the guide to our best investment ideas.

After nine years in charge, Dyson is taking time out from the investment industry. Since launch in 2001, the trust’s shares have rocketed 156%, more than triple the 48% return from the MSCI Europe index. His successor Michael Hufton joined Sloane Robinson in 2008 and he has a tough act to follow. The kind of outperformance we have been used to from a proven hand now comes into question and we prefer to focus on seasoned fund managers who we believe can add value over the long term – hence the removal from Citywire Selection.

We have a number of other picks for European equities and remain happy with the quality of managers we have chosen so for the moment no replacement will be made.

Even though Dyson is moving on, it would be pertinent to highlight his thoughts on the European equity market. He thinks they have been getting ahead of themselves with analysts’ predictions for 2011 excessively high and a double dip in Europe very much a possibility.

Chris Rice (pictured), fund manager of Cazenove European - our star pick for investing in Europe - echoes a number of these sentiments.

Although not necessarily predicting an outright double dip, he thinks production slowing down from its peak is a certainty. Rice sees a high risk of analyst downgrades in 2011 and is cautiously positioned.

Like Dyson, Rice has endured a tricky six months. But his experience of positioning the fund to match his view of the business cycle has rewarded investors over the long term.

He is sticking to the value he finds in defensive companies and if economic momentum starts to take a turn, the portfolio would be well placed to outperform.