‘Wirecard was wrong, but it wasn’t our worst stock’ Markets Hub

Carlos Moreno, who runs Premier Miton’s table-topping Europe fund, tells Harry Brennan how he picks stocks – and about that dreaded investment

Ranking as the best-performing European fund over the past three and five years, the Premier Miton European Opportunities portfolio has amassed more than £2bn in savers’ cash, even though it has only been up and running since 2015.

After its recent fifth anniversary we spoke to the man behind the strategy. Here Carlos Moreno, the fund manager, tells Telegraph Money about how the fund has fared during the pandemic and about its investment in the payments firm Wirecard, which collapsed last year in one of Europe’s biggest accounting scandals, involving €1.9bn (£1.7bn) in missing cash.

WHO IS THE FUND FOR? Anyone who wants to invest in European companies – from Iceland to Russia – and demands returns similar to what you would hope to get from owning an American or Asian fund.

People should invest less in Britain and diversify with more international holdings. Europe is one of the three biggest regions in the world and is our main trading partner. The continent is very good at certain things, like making branded machinery. Half of European companies’ earnings come from overseas, so the stocks we buy are effectively global.

HOW DO YOU PICK STOCKS? I like to buy identifiably good businesses at a fair price, rather than struggling firms at bargain prices. I am looking for companies that everyone will be talking about tomorrow.

To identify them, we look at whether a company is making good money and whether anyone else could replicate what it does.

The fund taps into the big drivers in the world, major long-term trends such as the shift to online, the medical needs of an ageing population and a low-carbon economy.

So we own companies such as FinecoBank – Italy’s answer to Isa provider Hargreaves Lansdown – and Amplifon, which makes hearing aids.

See live financial data and build your own portfolio with our interactive investment tool

telegraph.co.uk/ markets-hub

DO YOU REGRET YOUR INVESTMENT IN WIRECARD? It hasn’t been our worst investment over five years. It went up and went down a lot. We have several investments every year where we sell at a loss.

If you face up to it when your strategy is not going to plan and take it on the chin it will save you pain in the long run.

Wirecard was one of those ones we got wrong, although it just about “washed its face” [broke even] over the time we owned it, so we managed to sell out early enough not to get too caught up in it.

Sometimes, instead of running a business, the people in charge are doing something else entirely different behind the scenes and trying to cover it up. We have to live with that.

HOW HAVE YOU SUSTAINED YOUR PERFORMANCE DURING THE PANDEMIC? Our focus on highly cash- generative businesses with high barriers to competition meant we avoided some of the worst of the falls you saw in pubs, airlines and travel firms.

We split the portfolio between defensive and cyclical companies. This naturally balances us out as the economy ebbs and flows – something I do not have the power to anticipate and predict.

Semiconductor company Soitec is a cyclical one; it will have highs when new tech needs to be rolled out and lows in between.

A defensive one would be something like BioGaia, a biotech firm that sells probiotics, which we think will continue to grow as we all become more interested in our own health.

WHAT HAVE YOU CHANGED? We have taken advantage of some dips in prices and have bought into firms that have suffered, such as Airbus, the aeroplane maker.

We also bought ticketing company CTS Eventim because we think it will recover as things return to normal.

WHAT HAVE BEEN YOUR BEST AND WORST INVESTMENTS? The best would be ASML, which supplies semiconductor companies. We bought at the end of 2018 and it is up by around three times.

The worst would be a Belgian company called Ion Beam Applications. It makes proton therapy machines for cancer treatment. The problem is the business is quite niche and serves a small market. We bought at a relative high and our

DO YOU HAVE YOUR OWN MONEY IN THE FUND?

Yes, 90pc of my savings.

HOW ARE YOU PAID? I get more if I do a good job.

WHAT WOULD YOU HAVE BEEN IF NOT A MONEY MANAGER? I would have worked in medicine.