Almost half the Adviser Fund Index panellists believe that continental Europe will be the best-performing equity region over the next year.
Out of 16 respondents in last month’s survey, 43 per cent expect Europe to perform best. They say strength in the German economy, restructuring in France, enlargement of the EU and mergers and acquisitions have all played a part in boosting confidence.
Of the 10 Europe excluding UK funds in the three AFIs, Artemis European growth is the most popular with the panellists. It is held 17 times in total while the second most popular fund, the 659m Schroder European alpha fund, is held eight times.
Launched in March 2001, the 1.93bn Artemis European growth fund is ranked first out of 73 funds in the Europe excluding UK sector over five years to September 3, according to Morningstar. Managed by Philip Wolstencroft and Peter Saacke, it returned 166.54 per cent compared with a sector average of 106.79 per cent. Over three years, the fund is ranked seventh out of 81 funds, returning 98.47 per cent compared with the 79.37 per cent sector average.
AWD Chase de Vere savings and investments manager Anna Bowes, Gerrard Investment Management investment manager and associate director Kypros Charalambous and Whitechurch Securities head of research Ben Willis all hold the fund within their AFI portfolios.
Bowes says: “Wolstencroft and Saacke are very experienced managers and they have a great process. The European economy remains very strong and business confidence is at record highs. Europe is considered a strong investment environment.”
However, Bowes is wary of predicting which sector will do best. She says it is impossible to know. “A number of sectors could do well over the next 12 months. There is no way of knowing. It is important not to plump for one sector over another. It is important to have exposure to them all. Asset allocation is about geographical diversification as well.”
Charalambous holds the Artemis European growth and Lazard European alpha funds in his AFI portfolios and wants to add New Star European growth and CF Odey continental European at the next rebalancing in November.
He says Germany is a big theme and is the main reason the group has increased its exposure to Europe over the last month.
“Generally, the structural story is the long-term theme, particularly in Germany. That is a fundamental positive. There is an export-led recovery in Europe. It also benefits from the emerging market story. Business sentiment indicators are at their highest level and corporate earnings within Germany have been very strong,” says Charalambous.
Willis holds Artemis European growth in the Balanced AFI and New Star European growth in the Aggressive AFI. “Both funds are stockpicking funds. They have done well. There is no reason to review or change them at all,” he says.