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Citywire Selection: our top five European funds
by Matthew Goodburn on Nov 08, 2012 at 07:00
Is it time to add more European equity exposure to your portfolio? Some of our top asset allocators think so. Scroll through the gallery to reveal Citywire Selection's top five Europe ex-UK funds, and to find out which has achieved star pick status.
Chris Rice is wary of buying stocks that have been on a strong run due to what he sees as over optimistic expectations for their continued growth. Believing many of these are now too expensive, he is finding opportunities in overlooked areas such as telecoms and Swiss textile companies. Rice backs this as a balanced way of exploiting ideas that are set for a positive turning point. Underperformance has started to slowly turn round but the fund remains Under Review as we look for his current views to bear fruit.
In the five years to the end of October the fund has posted a return of 2.9% compared to -7.5% by the benchmark.
Barry Norris is waiting for a policy response from European leaders to make him change his cautious view in which banks are shunned. In the meantime he is backing large defensive companies and quality growth stocks that he believes can outperform in a low growth environment. While the last six months have been disappointing, long-term outperformance remains strong, and Norris is continuing to back core Europe over the periphery.
Over the five years to the end of October the fund has returned 4.5% compared to -7.5% by the index.
Rob Burnett is avoiding European banks, preferring the oil and gas, chemicals and luxury goods sectors. His generally cautious view has not been rewarded in the short term due to the portfolio being impacted by the falling oil price, but he has beaten the index in four of the last five calendar years by adjusting the portfolio through changing macroeconomic conditions.
Over five years to the end of October the fund has returned 0.4% compared to -7.5% by the index.
In an unloved part of the market, Dave Dudding has made positive returns in 2012 while the index was in negative territory and risk-adjusted returns over the long term have also proved very strong. Industrial companies with pricing power and healthcare stocks are most favoured with Dudding backing his stock picks to be the winners of tomorrow, but currently trading at attractive prices.
Over the five years to the end of October, Dudding has returned 35.4% compared to the benchmark HSBC Smaller European (ex UK) Companies return of -11.8%.
Alister Hibbert is backing a mix of defensive consumer stocks and consumer names with high exposure to emerging markets. Financials remain a key underweight and his punchy approach continues to deliver outperformance both recently and over the long term. We back this as a star pick for a strong uplift during a potential rebound in European equities.
Over the five years to the end of October, the fund has returned 39.1% compared to -7.5% by the FTSE World Europe ex UK benchmark.