For most of the past decade, European equities have notably underperformed stocks in the US. However, for asset allocators considering their exposure in a world economy recovering from Covid-19, Europe is currently offering more attractive valuations.
For South African investors looking to access this market, there are also a growing number of funds available for sale locally. While it has never been a significant allocation in local portfolios, fund selectors do now have more diverse choices when looking at European equity.
The top-performing portfolios in this space over the past three years have been the T Rowe Price European Equity fund, managed by Tobias Mueller, and the AS SICAV I European Equity fund, managed by the Abrdn team of Citywire AA-rated Sanjeet Mangat, A-rated Jonathan Allison and + rated Ben Ritchie.
Both of these funds returned over 56% for the three years to the end of July.
This was materially ahead of the FTSE World Europe Index return of 44% over the same period.
The number of outperforming funds in this space is, however, limited. Only five European Equity funds available to South African investors have outperformed their Morningstar benchmarks over the past three years.
Even among the leading performers, divergence in returns is quite wide. The difference in cumulative return between the top-performing fund and the ninth-best fund over the past 36 months is just under 22%.
The performance of the CS European Dividend Plus Equity fund, which is tenth, is not directly comparable as it is an income fund.
To see the full list of the 10 top-performing European Equity funds over the past three years, click through the slides.