From Brics to Fangs, investment bank analysts have always found the time between slide decks to come up with trendy investing acronyms for the masses.
In 2020 when most of us had other things on our minds, the Goldman Sachs brain trust [or marketing department, or both] coined “Granolas”: a group of 11 European stocks tipped to rival US tech mega-caps for clout and consistency of returns.
Somehow, despite the focus on the Magnificent Seven, it has entered back into popular vocabulary of late - in part because the Granolas accounted for 60 per cent of all gains over the past year in Europe. And so, once again, the finance world is talking about cereal.
We thought it timely to examine DFMs’ exposure to the group within the most popular European funds.
But briefly a refresher that the Granolas include: GlaxoSmithKline, Roche, ASML, Nestle, Novartis, Novo Nordisk, L'Oreal, LVMH, AstraZeneca, SAP, Sanofi - so yes, technically it should be 'Grannnolass' but take that up with Goldman Sachs, not us.
Excluding the two UK stocks in the packet – AstraZeneca and GSK - we’ve examined how DFMs’ Euro funds view the remainder: Roche, ASML, Nestle, Novartis, Sanofi, Novo Nordisk, L’Oreal, LVMH and SAP.
It transpires that the average weighting to the Granolas among our allocators is 15 per cent, which is below the MSCI ex-UK total of 24 per cent.
But within this, there’s quite a range. Both BlackRock funds - European Dynamic and Continental European Income - contain 20 and 27 per cent of the group respectively, while Lightman European and Premier Miton European Opportunities opt for much lower stakes of 3-4 per cent.
That latter is explained by Premier Miton's offering is essentially a small-cap fund.
European Dynamic, £3.9bn in size, is the most popular European equity fund in our database, held by 11 allocators in total but Lightman has an growing group of followers and is owned by six portfolio managers while the Premier Miton fund is owned by five.
If you want a full bowl of the stuff, then best to go for Fidelity European, which parks an enormous 34 per cent in Granolas and in fact they seven of the nine stocks in the fund's top 10, with Dutch semiconductor giant ASML Holding its largest constituent.
Lightman European has been gaining popularity in our database since it was set up by former Neptune manager Rob Burnett in 2019. It avoids the noise in more ways than one, eschewing not only Granolas but luxury consumer goods, too.
Burnett instead chooses large exposures to mineral companies like Equinor, Antofagasta and Galp Energia, planting his flag firmly in the value camp while the Granola's are, of course, staples of the growth investing universe.
The same European funds under scrutiny have become, if you’ll excuse the pun (again), overweight to Denmark as a result of Novo Nordisk’s recent rally.
BlackRock’s two flagship European funds hold 9 and 10 per cent in the drugmaker alone, the highest of any products in the sector.
But these two names have been on the receiving end of some rather heavy outflows of late, which you can read about in more detail here.
But it seems as if the Granolas may be the last theme to capture the market’s attention for the foreseeable future.
Oh, hang on – we’ve just found a Waverton note from 2023: “Our acronym is Nuts: Nat Ned, UPM, Technip Energies, Siemens.”
Frankly, we’re not surprised that this one hasn’t taken off but maybe we'll eat our words.
