Bennett (pictured) points out that regulatory changes in the EU will require cars to contain advanced active safety systems in order to qualify for the highest safety ratings from 2015 onwards. On top of this, he says, the whole industry is undergoing a revolution in computerisation that will repay investors who select the right companies.
"The sea-change has been driven by the dramatic advancement of technology," he said.
"Auto was once the industry for superior mechanical engineering and a frontier for efficiency, such as in lean processes and mass production. Now it is one served by computer power."
"As such, it has seen the tech giants manoeuver into the space. Google tested a prototype of the world’s first fully autonomously driven vehicle in 2010; Tesla, started by South African entrepreneur Elon Musk, the founder of PayPal, was one of the quickest start-ups to make a profitable electric car. Microsoft is also pegged to get involved."
The area of safety is a particularly interesting one, he adds, which is leading the industry towards the automatic cars that Google and others are developing.
"This is essentially about the vehicle technology that protects us," he continued.
"There have been multiple stages in its progress. First was passive safety, components we all know about such as airbags and seatbelts. Next was active safety – the use of technology to prevent accidents – which began with anti-lock braking systems (ABS) and electronic stabilisation programs (ESP)."
"The end-goal is ultimately the fully automated vehicles that Google showcased. It is in the steps between where we are now with active safety and the end-goal that we see opportunity."
"Advanced driver assistance systems (ADASs) or assisted driving is an area of particular growth. Semi-auto parking assistance and motorway steering are others."
"Technology integration, consumer demand and the incentives by insurers are clear, but there is also regulatory pressure."
"Safety assistance is one of four areas in which the European New Car Assessment Programme (NCAP) regulations judge cars."
"NCAP rewards and recognises car manufacturers that develop new safety technologies. From a regulatory perspective, by 2014 it will not be possible for cars to receive a five star-rating without an active safety component."
Bennett has bought into French company Valeo, which manufacturers electronic car parts for interiors, among other products.
Data from FE Analytics shows that four funds hold the company in their top 10: Baring Europe Select, Lazard European Smaller Companies, Newton European Higher Income and Old Mutual Global Equity Absolute Return.
Bennett also holds 3.1 per cent of his fund in Swedish-American company Autoliv, which focuses on safety systems such as airbags, seatbelts and night vision systems, as well as many "passive safety products".
FOUR Active European ex UK Equity is the only other IMA fund to hold it in its top-10.
German firm Continental is another holding in this area. The company is engaged in the development of automated driving technology, including motorway and parking assistants.
It is a much more widely held stock, appearing in the top 10 positions of 16 IMA funds, including BlackRock European Dynamic, Jupiter European Opportunities and Threadneedle European.
Source: FE Analytics
Bennett has run the five crown-rated Henderson European Focus Trust since February 2010.
The fund was a top-quartile performer in 2010, 2011 and 2012 and is second-quartile so far this year.
Performance of fund vs sector over 3yrs
Source: FE Analytics
The fund has 23.9 per cent in healthcare, 22.6 per cent in consumer products and 19.9 per cent in financials, with a further 9.8 per cent in industrials.
The fund has ongoing charges of 1.76 per cent and requires a minimum initial investment of £1,000.
Bennett also took over the closed-ended Henderson European Focus Trust in December of 2010.
Since then it has outperformed both its sector average and benchmark, returning 65.16 per cent while the average Europe ex UK trust has made 55.35 per cent and the FTSE World Europe ex UK index 32.09 per cent.
Performance of trust vs sector and benchmark since Dec 2010
Source: FE Analytics
The trust has similar sector weightings, with 28.1 per cent in healthcare, 18.4 per cent in financials and 17.6 per cent in consumer products; it has 9.5 per cent in industrials.
Autoliv does not make the top-10 of the trust although it does for the fund.
The trust has ongoing charges of 0.82 per cent.
