But not all areas should be tarred with the same brush. European smaller companies have performed well in the three years to May 1, with the IMA European Smaller Companies sector averaging 30.63 per cent, dramatically outperforming the 10.01 per cent rise on the HSBC Smaller Europe ex UK index, according to FE Analytics.
For Nick Williams, head of small- and mid-cap equities and manager of the £496.1m Baring Europe Select trust, this demonstrates the fact the macro challenges of Europe have also thrown up some good stockpicking opportunities.
“In general terms, I’m a fan of Europe as a place; the culture and the people,” he says. “In more specific terms to do with the stockmarket, I think the top-down issues have obviously been a challenge, but they have also produced opportunities. When I look at the performance of a lot of European small-cap fund managers, it looks quite good relative to almost any European benchmark you choose.
That means the difficult top-down environment has presented opportunities for good stockpickers to identify companies that are not just surviving but prospering in this environment.”
He admits, with a smile, “it would be nice if it was just me who had done that”, but adds that, depending on the timeframe, he is not necessarily in the top two of a very small peer group.
“I have to take my hat off to my competitors as well. There have been, pretty much across the peer group, some very good performers,” says Mr Williams. “But it has resulted in a ‘survival of the fittest’ environment, and so the European Smaller Companies peer group is a smaller one than it was six or seven years ago, perhaps not surprisingly. But out of that adversity has come opportunity.”
Having studied English Literature at Corpus Christi College at Oxford, fund management was not necessarily Mr Williams’ first-choice career. “It was only after university that I realised I had to have a career,” he says. “I made a few mistakes early on in the process and then I suppose I was lucky enough to fall into it.”