Avi Lavi, head of European equities at AllianceBernstein, had a tough act to follow when Sharon Fay handed over the reins in January. In winning the Financial News award for European equities, he has proved he is up to the task.
Lavi, who joined AllianceBernstein 10 years ago as a research associate covering utility stocks, worked alongside Fay for a year as co-chief investment officer of European equities before Fay moved back to New York, where she oversees global value equities. In keeping with AllianceBernstein's preference not to hire from rival managers and banks, Lavi joined Bernstein in 1996 from the State of Israel Economic Offices in New York, where he was assistant controller. Value investing has become difficult this year as the spread between valuations of high and low-quality stocks has narrowed. Lavi has moved his portfolios to be overweight in financials, aerospace and defence stocks at the expense of medical and consumer companies. As a result he has protected the strong performance delivered by AllianceBernstein. Over three years to the end of June, the strategic value strategy, which invests in 40 to 60 stocks, recorded an annualised return of 27% against 20.4% for the FTSE world eurobloc index. European telecoms and media stocks have been among the worst performers. AllianceBernstein has reduced its underweight position in the sector and is overweight in Vodafone, which over the past two months has seen its share price rise from 110p to 134p. Lavi said: "The sector is starting to be interesting after a couple of years of underperformance because we've seen a decline in pricing for mobile phone contracts and margins. There was previously a reluctance by the big players to cut prices and some lost market share. Now the marginal players are not making any money and the sector is holding back in cutting prices, which should bring stability." Most interest in AllianceBernstein's European equities strategies has come from pension funds in Europe and Asia. The company runs $3.6bn in European equities, up from $2.5bn at the end of September last year. Private partnership TT International ranked second in this year's awards. The European equity strategy is managed by partner Dean Smith who joined in 1998 from LGT Asset Management. TT had a strong start to the year. In the 12 months to the end of June, the euroland strategy returned 31% against a benchmark return of 20.%. In third place was Axa Rosenberg, a quantitative manager. Its eurobloc broad market strategy returned 24.5% for the year to the end of June.
