Get strong growth regardless of the market with FP Crux European Special Situations

It is among the top five performers in Investment Association (IA) Europe ex UK sector over one, three and five years and has a reasonable ongoing charge of 0.86 per cent.

Europe is on the path to recovery, with gross domestic product (GDP) growth steadily emerging and unemployment falling in countries such as Spain. Other reasons to feel positive about the region include supportive central bank policy and low interest rates, both of which should keep equities afloat.

But the market remains down in local currency this year, so it could pay to invest via a fund manager who can identify stocks that will perform well even when the wider market does not, such as Richard Pease, manager of FP CRUX European Special Situations fund. He has a long and successful track record spanning 26 years, over which time he has stuck to the same investment strategy and demonstrated significant outperformance.

He favours conservatively managed, capital-light companies with strong balance sheets that operate in areas with high barriers to entry. Although European companies are unlikely to be totally immune to macro issues, these attributes should make them more resilient in downturns and able to keep control of their prices in spite of wider economic trends.

Stocks in his portfolio include Swedish services management company Coor (COOR:STO) and French contract caterer Elior (ELIOR:PAR), which have high levels of recurring revenues, and Scandinavian service management company ISS (ISS:CPH).

The fund is largely unconstrained and often takes large conviction positions. Despite this, historically it has been less volatile than its peers in the IA Europe ex UK sector, holding up in downturns as well as outperforming in rising markets.

In recent years markets have favoured quality, growth-tilted stocks with strong balance sheets and predictable earnings, as central bank activity has pushed down interest rates and yields. This environment has suited Mr Pease's investment style, but the fund could underperform if cheap value stocks return to favour. However, it should be seen as a long-term holding that will generate outperformance over the long term.

"Richard Pease is a top-quality manager and with a fund like this you should not market time it," says Ben Yearsley, founder of high-net-worth investment service Wealthclub. "If value-style investing comes back into fashion then this fund will underperform, but it is a good idea to have different styles of fund in your portfolio. Richard Pease invests in the kind of quality long-term franchises that will be here in 10 years' time. They might become cheap or expensive, and go in or out of fashion, but they will be here and still delivering returns."

So if you want strong growth over the long term regardless of market conditions, this fund still looks like a good way to get exposure to Europe. Buy.

Source: Morningstar, as at 20.09.16

Performance

Source: FE Analytics, as at 20.09.16

Top 10 holdings (%)

Source: Morningstar, as at 31.08.16

Geographic exposure (%)

Source: Crux, as at 31.08.16