Top 5/Bottom 5: Europe inc UK

Europe may not be an investor’s first choice of location to allocate to in the current economic environment.

Markets across the continent have been turbulent at the best of times, but investors may feel slightly more confident about investing within a sector that also allows allocation to the UK.

The IMA stipulates funds within this sector must invest at least 80 per cent of their assets in European equities, and can include UK equities but these may not exceed 80 per cent of the fund’s assets.

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While the national press may be constantly talking about rocky markets, funds in the sector tell a different story. In fact, on an initial £1,000 investment a year ago today, not one fund within 49-strong sector lost any money.

The Carmignac Grande Europe fund, the worst performer of the sector, returned £1,079 – the sector average is £1,311. The best performer, the BlackRock Global Funds European Value fund, delivered £1,422.

At first glance, the geographical allocation in the funds do not differ significantly – the BlackRock fund is 61 per cent allocated to the eurozone whereas Camignac has as 50 per cent exposure. This suggests the difference in performance has been down to asset allocation. Carmignac has its highest exposure to consumer defensive – 18.9 per cent – and consumer cyclical – 17.56 per cent – stocks. BGF owns 24.3 per cent in financial services and 19.7 per cent in industrials.

Best and worst Europe including UK funds (GBP denominated), one year to 1 July 2013
Top 5
BGF European Value A4RF GBP£1,422
JPM Europe Equity Plus A (dist)-GBP£1,402
Franklin European Growth A Ydis ££1,371
Cap Int European Growth and Inc Xd GBP£1,357
JOHCM European Select Val B GBP£1,347
Bottom 5
SVM All Europe SRI Retail£1,258
THS European Growth & Value Z£1,258
Virgin Climate Change£1,254
Trade Union Unit Trust£1,204
Carmignac Grande Europe I GBP acc£1,079
Sector average£1,311
Figures as at 1 July 2013, based on £1,000 initial investment. Source: Morningstar