Polar Capital European ex-UK Income Class I - Accumulation (GBP)

The fund has delivered an attractive return over Davis’ management, though it’s lagged the sector average partly as the manager's more value-focused style of investing has been out of favour for much of this time.

The aim of this fund isn’t only to beat its peers though – it also aims to be less volatile than the peer group and broader European market, as well as pay an attractive income. This is something it’s achieved, and the performance of the fund has been much smoother. Over the longer term, the fund has tended to lag a rising market but hold up better when markets are falling.

The defensive and conservative nature of the approach, the disciplined investment process and Davis' track record of European income investing gives us confidence in the fund's long-term prospects, and we expect it to be less volatile than its peers although of course there are no guarantees.

Please note the fund's charges are taken from capital rather than income. This increases the yield but reduces the potential for capital growth.

The fund aims to pay an income at least 10% higher than that of the MSCI Europe ex-UK index, alongside some capital growth over the long term. Davis looks for undervalued European companies that pay an income and have potential to improve over time. This investment style is known as value investing, though he also focuses on companies that could provide some stability during tougher times.

The manager focuses on companies that achieve at least a 10% annual total shareholder return, which includes dividend and earnings growth potential, over the medium term. Davis believes other investors underestimate the long-term potential of these companies.

The manager invests in companies that yield (a measure of income) at least 2.5% with the potential to be able to grow their dividends over time. He focuses on balance sheet strength and the competitive landscape. To do this he uses Porter's Five Forces – this helps to gain an understanding of competition, the threat of new entrants and substitutes, and the power of both suppliers and customers. To help limit volatility he considers how cash generative a business is, and how resilient they could be in a market downturn.

The fund invests in around 25-50 companies. As a concentrated fund, each investment could have a big impact on performance, which increases risk. The managers also have the flexibility to use derivatives which can magnify any gains or losses and increases risk.