European equity fund sentiment has been sliding since the middle of 2017 with sentiment in Q2 this year at its lowest since Last Word Research began its quarterly asset class survey.
The latest survey found 29% of pan-European fund selectors are looking to increase their European equity fund holdings over the 12 months to July 2019, 51% are looking to hold, 17% to decrease holdings, while 3% did not use the asset class.
According to Morningstar, the asset class has experienced outflows of €12bn (£10.8bn, $13.8bn) since the start of the year.
Methodology: All the funds in listed were chosen using FE Analytics, and were domiciled either in Ireland or Luxembourg and sit within either the FCA Recognised or Offshore Mutual universe. They are available for sale in at least three pan-European countries.
5. CapitalatWork European Equities E Cap
The CapitalatWork European Equities E Fund comes in at fifth worst with a loss of 3.2% during the seven months to 31 July 2018, according to FE Analytics.
The fund’s benchmark, the Stoxx Europe 600 Euro, gained 3.3% during the same period, and the Offshore Mutual universe Europe equity sector gained 1.7%.
Over the three years to 31 July 2018, the fund returned 1.2%, underperforming its benchmark that gained 9.4%.
According to the FT, the fund allocates 76.5% to the eurozone, 13.2% to Europe ex eurozone, and 7.1% to the UK. Its highest sector allocation is towards industrials (27.4%), followed by consumer cyclical (25.2%), and health care (21.1%).
4. Old Mutual European Equity A
The Old Mutual European Equity A fund comes in at fourth worst with a loss of 3.35% for the seven months to 31 July 2018, according to FE Analytics.
This was compared to its MSCI Europe benchmark that performed 3.2% up over the same period. The FCA Recognised European equity sector rose 2.3%.
Looking at a longer time period, over the three years to 31 July 2018 the fund also performed in the bottom quartile with a loss of 9.6%. During the same period the MSCI Europe grew 9.1%.
FE Analytics also gave the fund a one Crown Fund Rating, meaning that the fund has performed in the bottom 25% of its peer group.
The fund’s largest country allocation is in the UK (20.9%), followed by France (20.5%), and Germany (9.1%).
Its largest sector allocation is towards financials (24.7%), industrials (19.1%), and health care (12.2%).
3. Argonaut Pan European Alpha A
The Argonaut Pan European Alpha A fund has made a loss of 3.9% in the seven months to 31 July 2018, according to FE Analytics. This is compared to the Offshore Mutual Europe equity sector that gained 1.7%.
Over the three years to 31 July 2018, the fund was the worst performer with a loss of 20.7%.
However, the one FE Crown Fund Rating fund received a gold medal rating (considered a high distinction) by Sauren in 2017 for the fund’s lead manager, Barry Norris.
The fund’s largest country allocation is towards Norway (18.2%), followed by Austria (4.4%), and Denmark and Italy (both 3.9%).
Energy was the largest sector weight at 6%, followed by materials (4.9%), and industrials (4.5%).
2. Assenagon Substanz Europa P
Over the seven months to 31 July 2018, the Assenagon Substanz Europa P fund lost 4.2%, compared to its Offshore Mutual Europe equity sector that gained 1.7%.
The single FE crown rated fund also underperformed over the three years to 31 July 2018 at a loss of 11.8%.
During the month of July, the fund did post a gain of 1.7% and said the British pound’s depreciation against the euro had a negative effect on its sterling-denominated holdings and thus the fund’s performance. The fund’s factsheet noted that the appreciation of the Swedish krona had a positive effect.
The fund has its highest country allocation towards the UK (20%), followed by France (14%), and the Netherlands (12%).
Financials and industrials are the fund’s top sector allocation both at 18%, followed by materials at 12%.
Oyster European Selection C
The worst European equities fund in terms of performance since the beginning of 2018 is the Oyster European Selection C fund.
From January to 31 July 2018, the fund lost 6.5%, underperforming both its benchmark, the Stoxx Europe 600 Euro which gained 3.3%, and the Offshore Mutual European Equities sector’s gain of 1.7%.
Over the three years to 31 July 2018, the fund made a positive return of 2.5%. However, this was still below its benchmark’s performance of 9.4% and the sector’s 5% return.
According to the fund’s factsheet, its highest country allocation is towards France (23.2%), UK (19.5%), and Denmark (11.1%). Its largest sector weighting is towards consumer discretionary (24.8%), financials (23.1%), and industrials (19.1%).
Despite the fund’s poor performance, Square Mile’s rating research said the fund’s proposition of identifying a short list of quality businesses at a discount was attractive.
“But it does require a skilled and disciplined investor to be at the helm, which, in our opinion, the manager [Michael Clements] displays in abundance,” the research said.
The fund has received a two crown rating from FE.
For more insight on continental European investment, please click on www.expertinvestoreurope.com
