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Barings' European team sounds profit warning alert
by Robert St George on Jan 22, 2014 at 13:21
Last year was a strong one for European equities, with small caps the standout performers.
In the 12 months to the end of November, the average European equity fund returned 25% compared with 22% from its rivals in the global equities sector.
Small caps did even better, with the typical European small and mid cap fund up 34%, against 31% for their global counterparts.
In tandem, investors rediscovered their enthusiasm for Europe. In the year to November 2013 (the latest month for which statistics are available), a net £10.3 billion flowed into European equity funds, according to the Investment Management Association (IMA).
This contrasts with the £2.8 billion they attracted through the prior year. IMA European funds now contain £45 billion, a tenth of all the money held in open-ended equity products.
So 2013 should, then, have been a vintage year for the small cap-focused Baring Europe Select Trust .
In one sense, it was. Managed by Citywire A-rated Nicholas Williams and Colin Riddles, it swelled in size through the year from around £400 million to just shy of £1 billion.
‘Last year there was a very obvious shift in sentiment towards people liking Europe,’ Riddles said.
Performance, however, lagged the benchmark, although it has beaten its peer group. In the year to the end of November, Baring Europe Select produced 32.6% while the Euromoney Smaller European Companies ex UK index surged by 41.6%.
‘Last year was quite painful as people were buying anything,’ Riddles admitted.
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