Europe still showing solid consistency

Thames River Multi-Capital’s latest Fundwatch survey highlights Europe excluding UK as one of the most consistently performing IMA sectors over the last three years.

Using Lipper data to December 31, the firm initially focused on top-quartile fund returns in each of the last three years which showed UK smaller companies, Japan and emerging markets were the most consistent sectors. North America and sterling strategic bond had no funds of top-quartile consistency.

Thames then lowered the hurdle rate for its measure of consistency to focus on above-average returns in each 12-month period over the last three years.

The most consistent IMA sectors based on this criteria were Asia excluding Japan, Europe excluding UK and Japan, while the least consistent were UK all companies and UK income.

Thames says the consistency of Europe excluding UK may be surprising, given the sovereign debt problems in the eurozone but it sees Europe as a solid market with a population of good fund managers moving between big and medium-sized companies with less benchmark risk than UK stockpickers.

Co-head Rob Burdett says: “If you are looking at benchmarking in Europe compared with the UK, the UK is top-heavy and skewed. Europe is more dissipated, with less concentration in equity indices, so there is less benchmark risk in stockpicking and more active management.”