FUND FOCUS: EUROPEAN EQUITIES
Best performer five years:NIB Danske Invest Small Cap +57 per cent
Worst performer five years:BOI Life, Unit Funds European Ex UK -13.5 per cent
DESPITE THE turmoil in global equity markets as a result of the financial crisis, European Equities have held their own over the last five years. Data from Moneymate show that European equity funds have delivered an average return of 5.7 per cent since 2005.
National Irish Bank’s Danske Invest Small Cap Fund was the best performer, returning an impressive 57 per cent over the period. Its Danske Invest Europe Fund was second, with a return of 28 per cent.
The range in performance of the individual funds investing in European equities is extremely wide. This is because the category definition is very broad, comprising a mix of small-, mid- and large-cap funds, as well as varying regional weightings.
Bank of Ireland – whose BoI Life Unit Funds European Ex-UK was the worst performer at -13.5 per cent – points out its underperformance was because this specific fund does not have exposure to equities in the UK, Scandinavia and eastern Europe, all of which performed well over the period.
According to National Irish Bank’s Mel Mimnagh, the impressive performance of the NIB Danske Invest Small Cap is due to its focus on small-cap companies. “Small-cap companies have outperformed large caps generally over the last number of years, even despite the trough in 2008 and 2009,” he says.
The NIB Danske Invest Small Cap, managed by Danske Invest Europe in Copenhagan, invests in small-cap companies which have a market value of up to €1.8 billion. As well as the EU27 countries, Switzerland and Norway are also included.
Some 13 per cent of the fund is invested in British equities, Germany accounts for 20 per cent and the Netherlands comprises 12 per cent. The fund has no exposure to Irish equities.
Despite the impressive performance of the small-cap funds, NIB recommends investors invest in the broader Europe Focus fund, rather than risking overexposure to the small cap sectors, says Mel Mimnagh.
Nonetheless, he is very optimistic about the short- to medium-term prospects for European Equities generally.
