Allianz Europe Equity Growth CT EUR

Analyst Report
Morningstar's Take

by Ronald van Genderen

This high-quality team, led by the seasoned and highly regarded Thorsten Winkelmann, has returned to calmer waters after it had seen several changes since 2017. This warrants an upgrade of its People Pillar rating to Above Average from Average. As a result, some of the fund’s cheaper share classes are upgraded to a Morningstar Analyst Rating of Bronze, while more-expensive ones remain Neutral.Winkelmann leads this 12-strong high-quality team, mixing experienced members with talented but more-junior members. Since 2017, it has seen several changes, but it is now back on stable footing. Until 2017, Winkelmann headed this team alongside the equally experienced Matthias Born, but he left the firm in 2017 together with Martin Hermann. In the same year, the remit of the team was broadened with the launch of a global product, while the team’s original heritage lies in European equities. Further changes to the team were made in May 2020, as the Global Growth team was formed by merging this European Equity Growth team with Allianz’s Global Equity team. Although this added global equity experience and analytical resources to the team, four members of the former Global Equity team departed during 2020 and 2021. However, the team was reinforced with two hires in 2019 and one in 2021; in accordance with Winkelmann’s hiring policy these were junior people who will be trained in his philosophy. Although personnel turnover and team restructurings reduced our conviction, we’re reassured now Winkelmann has steered the team into calmer waters, and we believe it’s now well-resourced.The approach of the strategy is well-established and proven, applying a process that uses clearly defined quality-growth in stock selection. The purely bottom-up approach is relying on the team’s stock research centred around finding companies that can deliver structurally above-average earnings and cash flow growth that the market has not yet fully anticipated nor fully priced into a stock’s valuation. Although the strict adherence to these quality-growth characteristics doesn’t come without valuation awareness, the portfolio of this strategy can become richer in valuation compared with peers and benchmarks, which was the case from the end of 2020 through May 2022.The adherence to these quality-growth characteristics shows in the Morningstar Style Box, where the conviction-led and active 50-70 stock portfolio lands in the far right of the growth column. The benchmark-agnostic and purely bottom-up way of portfolio construction can lead to differentiating sector allocations. The technology sector has been clearly favoured by the team, while only a few stocks in the financial-services sector pass the approach’s selection criteria, and the team has become much less enthusiastic about stocks in the consumer defensive sector in recent years. Meanwhile, the portfolio can also show a tilt towards small caps.The performance of this strategy has been outstanding over the tenure of Winkelmann. The pronounced quality-growth profile and high-conviction portfolio can encounter headwinds at times, like during the first five months of 2022. The longer-term record remains impressive, outperforming all relevant yardsticks on a risk-adjusted basis.

Morningstar Analyst Rating™
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Portfolio RoleThis strategy may serve as a core holding for Europe-based investors. Investors in Asia may use it to diversify a broader portfolio.
Morningstar Pillars
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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