Jake Moeller uses the Lipper Leaders scoring system to analyse the best performing funds in IMA Europe ex UK Sector.
REUTERS/Jon Nazca
Most investors will be familiar with the headlines that have emanated from Europe in recent times. Despite the macro headwinds which have dominated the news, many fund groups have been able to generate some good returns with the commotion providing active stock pickers with unique opportunities.
These opportunities should not be overlooked – Europe offers the investors a wide range of stocks and industries which are not well represented in the UK. The range of performance outcomes in this sector is broad. In 12 months to December 2013 the sector returned 26% with the top fund returning 42% and the bottom fund 4%.
Table 1. Quartile Spread of the IMA Europe ex UK Sector – 12m to 31 December 2013.
Source: Lipper, a Thomson Reuters company.
The funds included in the table are those with the best 3 year total returns in this sector. Including the Lipper Leaders ratings reveals that these funds have also delivered excellent Consistent Returns (risk-adjusted performance relative to their peers) over the last 5 years – this shows that they are able to add value of a longer period of time.
Table 2. Top Performing Funds in the IMA European ex U.K. Sector (over 3 years)
Interestingly, the funds across the table have varied processes and portfolio composition. Schroder European (managed by Martin Skanber) has invested in PIIGs countries and is positioned for European recovery. Henderson European Focus (managed by John Bennett) is heavily weighted to pharmaceutical and consumer stocks. Threadneedle European Select (managed by David Dudding) likes basic materials whilst Invesco Perpetual European Opportunities (managed by Adrian Bignell has exposure to financials and industrials. Despite these differences, all of these funds share a good score across the Lipper Leader categories, proving that a comparable risk adjusted performance track record can be generated across differing fund manager styles.
It is worth mentioning that the Expense and Preservation scores are comparatively lower– active fund management tends to be more expensive and product structures can matter (Scottish Widows HIFML Euro Strategic is in a life wrapper for example). As fully invested equities funds, they can exhibit considerable volatility which accounts for the lower Preservation scores. A long term investor horizon and a good Consistent Return score should compensate the investor for these.
A version of this article first appeared in the January 2014 edition of Moneyfacts magazine.
