How to gain access to the German powerhouse economy
Funds with more than 25 per cent exposure to the nation have held up far better than the average UK equity fund in recent years.
In spite of all the negativity surrounding the European economy, Germany has held up surprisingly well since the beginning of the financial crisis. During a period that included the Lehman crash and the eurozone turmoil that followed, the MSCI Germany is down 0.64 per cent, compared to -9.47 per cent from the MSCI Europe ex UK.
With a number of managers now saying there is value in the under-bought European markets, and Germany continuing to prosper while other economies suffer, there is certainly a case for investing in a German fund, or a European portfolio with an overweight position in the region.
Performance of funds and sectors
|| 3yrs (%)
|| 5yrs (%)
|| 10yrs (%)
| Fidelity European Opportunities
| GAM Star Continental European Equity
| IM Argonaut European Alpha
| Threadneedle European Select
| Baring German Growth
| IMA UK All Companies
| IMA Europe ex UK
Source: FE Analytics
The five crown-rated Baring German Growth
portfolio, run by FE Alpha Manager Robert Smith
, is the only fund in the IMA universe focused entirely on the country.
Over the difficult past five years it has managed to return 9.12 per cent to investors, three times as much as the average fund in the IMA UK All Companies
On a ten-year period its returns of 168.58 per cent are exceptional, beating all the broadly-focused European funds under consideration in this piece.
The portfolio offers exposure to global German brands like Bayer – the top holding with 9.6 per cent of the fund’s money – Daimler Chrysler, Volkswagen and BMW, which are also top-10 holdings.
It has a total expense ratio (TER) of 1.58 per cent and is available with a minimum investment of £1,000.
Threadneedle European Select
– another fund with five FE crowns – is among those in the IMA Europe ex UK sector that has the greatest portion of its assets in the region. According to FE data, it outperforms Baring German Growth over both three and five year periods, having gained 49.18 per cent over the shorter timeframe. It has 27.3 per cent invested in Germany, compared to the 18.3 per cent of its benchmark.
Performance of fund versus sector and benchmark over 5yrs
Source: FE Analytics
Engineering firm Linde, chemical distribution company Brenntag and dialysis equipment provider Fresenius Medical Care are all in the fund’s top 10.
You’ll need £2,000 to get access, and the fund has a TER of 1.73 per cent.
The portfolio’s five-year returns of 21.99 per cent are significantly higher than any other fund in the list.
GAM Star Continental European Equity, like the Threadneedle fund, is a top-quartile performer in the IMA Europe excluding UK sector over one, three, five and ten year timeframes.
The portfolio is 4.4 per cent invested in German software multinational SAP, and also has Fresenius in its top ten. In total 27.91 per cent of its assets are in Germany.
The fund has a minimum investment of €10,000 and a TER of 1.6 per cent.
Fidelity European Opportunities
, which currently has 27.8 per cent invested in Germany, has a ten-year record similar to that of the GAM fund, gaining 132.89 per cent as opposed to 127.2 per cent. Losses of 8.82 per cent over five years are less encouraging, however.
The fund has a minimum investment of £1,000 and a TER of 1.72 per cent.
IM Argonaut European Alpha
– tipped by Premier’s David Hambidge
in an interview with FE Trustnet last week – is another strong performer over five years, returning 5.92 per cent to investors.
The five FE crowned fund is run by FE Alpha manager Barry Norris
, and has 29.3 per cent in Germany.
It has a minimum investment of £500 and a TER of 1.79 per cent.