Appointment of Phileas Asset Management – An evolution of the Strategic Europe Quality Fund

We write to you to inform you of the following developments in relation to the Strategic Europe Quality Fund (“the Fund”) which will become effective from the 1st of November 2021 (subject to the approval of the Central Bank of Ireland).

29 Oct 2021

We write to you to inform you of the following developments in relation to the Strategic Europe Quality Fund (“the Fund”) which will become effective from the 1st of November 2021 (subject to the approval of the Central Bank of Ireland).

Following a notification from Lofoten Asset Management, advising that Willem Vinke intends to step back from managing European equities to pursue personal projects, the Eric Sturdza Group initiated its succession planning process, which includes a robust and ongoing in-depth screening of potential investment teams.

This process led to a recommendation by Eric Sturdza Investments, as the Investment Manager, that Phileas Asset Management (“Phileas”) be appointed as the Fund’s Investment Adviser. We would like to highlight at this point that Willem remains committed to the Fund throughout the transition to Phileas, protecting the interests of our investors.

The recommendation to appoint Phileas as the Investment Adviser to the Fund was made following the satisfactory completion of our full and in-depth due diligence process and taking the below into consideration.

Phileas Asset Management credentials

Long term performance relates to the returns of the long book of Phileas’ L/S fund from 2011, whilst “Fund Launch” depicts the returns of their long-only UCITS Fund from 2015.

  • Phileas currently manage a European equity UCITS fund, which will now close to new investors (the “Phileas Fund”). The Phileas Fund has a strong, demonstratable track record, with an alignment to the existing approach adopted by the Fund – active, bottom-up fundamental analysis, based on proprietary research and modelling, resulting in a concentrated portfolio of European large / mid caps, with a quality bias.
  • Ludovic Labal and Cyril Bertrand, who co-founded Phileas, and who combined have approximately 44 years of experience in the European equity markets will be the co-Portfolio Managers of the Fund. We believe the Fund will benefit from the appointment of Phileas’ motivated and engaged investment team, who are active owners in their business, ensuring a strong alignment of interests with other stakeholders.
  • The performance track record of the Phileas Fund, which dates to October 2015, is compelling when compared to the Benchmark Index (see below), delivering an annualised return to their clients of 9%, outperforming the MSCI Net TR index by 3% annualised1, whilst volatility and the associated SRRI for the Phileas Fund and Index are aligned. The Phileas Fund and Index currently have SRRIs of 6.Phileas-Asset-Management-graphic-2
  • Phileas have been managing a long / short strategy since 2011. The team’s long-term performance, which includes gross returns of the long book associated with their long / short strategy from 2011 to 2015, and the net returns of their long-only strategy thereafter has delivered an annualised gross return of 15%, compared to 7% for the Index. Please refer to the notes section at the end of this document for details as to the construction (associated with the “Phileas LO Track”) of the displayed performance track record:Phileas Asset Management graphic 3
Phileas Equity Europe I 14.93%
Annualised Returns MSCI Europe NR EUR 7.25%
EAA Fund Europe Large-Cap Growth Equity 9.41%
  • Phileas is a UNPRI signatory, and their existing Fund is classified as Article 8 under the Sustainable Finance Disclosure Regulation (“SFDR”). Accordingly, their investment process embeds ESG, sustainability and carbon risks factors within their stock selection process. Current Morningstar Sustainability Globe Rating:Morningstar-Sustainability-Award-4-globes-above-average
  • In addition, Phileas seek to ensure the portfolio’s carbon footprint is maintained well below that of the benchmark, an approach that will be retained when they assume responsibility for the Fund. Below is a snapshot of a selection of carbon metrics3 (source; Morningstar Direct) which highlight the impact of the team’s approach with regards to carbon exposure:Phileas-Asset-Management-graphic-4

We will also be taking this opportunity to adjust a select number of terms associated with the Fund which we believe will be beneficial for our investors:

  • Research fees – 5 bps will no longer be charged to the Fund.
  • SI Classes – the minimum investment criteria is being reduced to 10 million.
  • Expansion of the anticipated portfolio concentration to 30-40 stocks.


Phileas’ investment process and approach

Research within Phileas is primarily generated internally utilising proprietary standardised models. Stock selection is based on strategic analysis, accounting validation and financial analysis, enabling an assessment to be made on the basis of short-dated Discounted Cash Flow (“DCF”) models. The output is a high conviction portfolio of 30 to 40 large and mid-cap liquid stocks.

Phileas-Asset-Management-graphic-5The following are key considerations within the team’s opportunistic approach to quality investing:

  • The identification of catalysts for price revisions.
  • Attractive valuations, with sound upside potential, warranting the risk being taken.
  • Selective approach considering:
    – Cyclicals – at the bottom of the cycle.
    – Restructuring / recovery plays, with strong management and balance sheets.
    – Avoidance of “value traps”.

Following the appointment, Phileas will maintain the Fund’s Pan-European equity portfolio, with a “quality” bias; however, the team are style agnostic and strive to invest in those opportunities that present the most compelling risk / return profile, actively rotating the style bias within the investment portfolio through the market cycle, based on their fundamental bottom-up stock selection process. This active management of the positioning of the portfolio during periods of volatility and evolution in the market cycle has historically delivered value to investors2 as depicted above when compared to the benchmark index, and wider peer group.

The team have demonstrated a preference for exposures within the tech and industrial sectors. We, therefore, expect that the historical bias within the portfolio to staples and big pharma to be reduced following Phileas’ appointment, with a move towards more dynamic companies4. At this stage of the market cycle, we believe that the new strategy will deliver superior alpha for our investors, benefiting from exposure to companies with higher structural growth.

As noted above, the Fund will continue to maintain its SFDR Article 8 classification, thanks to Phileas’ robust and fully integrated ESG approach and philosophy, a summary of which is provided below. Phileas are committed to being active owners, undertaking regular engagement with investee companies on ESG related considerations, and systematic voting in accordance with our Voting Rights Policy. As a result, the Fund will continue to adhere to our ESG policy and associated exclusion lists, but will also now reflect Phileas’ own exclusion list (which is aligned to the exclusion list issued by the Norges Bank).

Phileas include ESG analysis as part of their stock selection process, considering ESG factors which they believe have the potential to have a lasting impact on a company’s value. As part of this process, they undertake sensitivity analysis, with a focus on:

  • Environment: Decarbonisation, pollution, and waste.
  • Social: Human capital, customer / supplier relations, product impact.
  • Governance: Alignment of interests, board independence, business ethics, risk management.

Updated documentation reflecting the above adjustments will be made available via, along with additional information regarding the Fund, the team and their investment process and philosophy, including a webinar series.

We are very excited by this new venture, believing that this represents an evolution in the Fund’s positioning within the market, moving from a cautiously positioned portfolio to a more dynamic offering, whilst retaining the overall strategy and approach to investing. We believe Phileas’ appointment will benefit the Fund, given the team’s active management of the style bias throughout the cycle, taking advantage of opportunities as they present themselves, as well as the more integrated and robust approach to the management of ESG and carbon-related factors as part of the investment process.

Group Eric Sturdza SA has taken a minority stake in Phileas to further ensure and demonstrate the alignment and long-term commitment to the appointment. We believe that active ownership at all levels will ensure that there is a strong and long-term alignment of interest amongst all stakeholders.

We look forward to sharing additional information and introducing the new team to you shortly; however, remain at your disposal should you require any additional information or assistance in the interim. Please do not hesitate to contact Adam Turberville, Director of Eric Sturdza Investments should you wish to discuss further.

Adam TurbervilleAdam Turberville
+44 1481 742380

We take this opportunity to thank Willem and his team at Lofoten for their dedication, commitment, service, and performance over the past 11 years. We are proud of the collective achievements to date and look forward to the implementation of this next stage in the Fund’s evolution.

Appointment of Phileas Asset Management


Download this article




1 Source: Morningstar. Chart performance displayed from the inception of the Phileas Equity Europe Fund (15 October 2015) to the end of August 2021. Please note Past performance may not be a reliable guide to future performance. Returns could be reduced, or losses incurred, due to currency fluctuations. Index: MSCI Europe Net Total Return Index.

2 Source: Phileas & Morningstar. The performance track record for Phileas’ long-only capabilities dates back to 2010 consistent with the long book of Phileas’ long / short fund since 2011 through to the launch of the Phileas long-only European equity strategy in 2015. The long book’s track record has been obtained from Phileas and audited by KPMG but does not have any fee drag applied and the long book’s exposure has been grossed up to 100%, accordingly returns and performance data are provided purely as a guide and no reliance should be placed on this information. Performance from 15 October 2015 is attributable to the Phileas Equity Europe Fund and has been sourced from Morningstar. Please note Past performance may not be a reliable guide to future performance. Returns could be reduced, or losses incurred, due to currency fluctuations. Index: MSCI Europe Net Total Return Index.

3 Carbon metric definitions (Source: Morningstar):

Carbon Intensity – The asset-weighted average of holdings with actual emissions data from the Carbon Disclosure Project or estimated values from Sustainalytics in a portfolio. A lower score is better. Carbon Intensity is computed for each holding as follows: Total Emissions (metric tons of Co2) / Revenue (Mil USD) and aggregated at the fund level. Sustainalytics looks at the latest reported scope 1 (direct emissions from owned or controlled sources) and scope 2 (indirect emissions from the generation of purchased energy) Green House Gas intensity and emissions for over 10k companies. More than 100 different estimation models are used for non-reporting companies.

Stranded Assets Risk – The asset-weighted average of the carbon stranded assets risk for holdings with Sustainalytics carbon research in a portfolio. This score measures exposure to stranded asset risk based on the carbon intensity of fuel mix and involvement in high-cost production. A lower score is better. The stranded assets risk assesses the carbon assets risk of both oil and gas producers and the top 1,000 US companies. Exposure includes life-cycle carbon intensity of production and proven reserves as well as involvement in high-cost projects.

Emissions Scope 1 – The asset-weighted average of holdings with scope 1 emissions data from Sustainalytics in a fund. Scope 1 emissions include direct greenhouse gas emissions from sources that are owned or controlled by the companies held in the fund. Scope 1 can include emissions from fossil fuels burned on site, emissions from entity-owned or entity-leased vehicles, and other direct sources.

Emissions Scope 2 – The asset-weighted average of holdings with scope 2 emissions data from Sustainalytics in a fund. Scope 2 emissions include greenhouse gas emissions from the generation of purchased electricity consumed by the companies held in the fund. Scope 2 emissions physically occur at the facility where electricity is generated.

Portfolio Carbon Risk Score vs. Benchmark – % difference in Portfolio’s Current Carbon Risk vs. Benchmark Carbon Risk Score. This number indicates whether or not the portfolio is more, similarly, or less exposed to Carbon Risk relative to the benchmark.

4 Source: Morningstar. Portfolio Data as of 30.06.2021.