Three European equity and emerging market funds have scored a maximum rating of five FE Crowns at their first attempt.

The FE Crown Rating system takes into consideration a fund’s Alpha generation, volatility and the consistency in which it has outperformed its sector and benchmark. 

The trio of European equity funds – Allianz European Equity Income, Scottish Widows HIFML European Focus and Standard Life European Equity Income, which were all launched in the early months of 2009 – have all secured healthy returns over the past three years, despite the current concerns in the eurozone. 

The standout performer of the three is the Scottish Widows HIFML European Focus fund, headed up by FE Alpha Manager Alexander Darwall.

According to FE data, the £5.5m portfolio has returned 55.67 per cent over three years, compared with 22.24 per cent from its FTSE World Europe ex UK benchmark. 

Performance of fund vs index over 3-yrs

 

Source: FE Analytics

Darwall also heads up a number of other vehicles including the FE five crown-rated Jupiter European portfolio. 

Allianz European Equity Income and Standard Life European Equity Income have outperformed their benchmark by a smaller margin, but with a yield of 4.49 and 5.61 per cent respectively, they tick the right boxes for income-seekers. 

The three emerging market funds that achieved the accolade of five crowns are First State Global Emerging Market Sustainability, First State Latin America and Scottish Widows HIFML Far Eastern Focus.

While both First State Global Emerging Markets Sustainability and Scottish Widows HIFML Far Eastern Focus have been strong on an absolute and relative basis over the last three years, with returns of 84.60 per cent and 86.80 per cent respectively, First State Latin America has outperformed its benchmark by an even greater margin. 

Performance of fund vs index over 3-yrs

 

Source: FE Analytics

According to FE data, it has returned 103.44 per cent since its launch in April 2009 – more than twice as much as its MSCI EM Latin America benchmark. 

Not only has First State Latin America, which is run by FE Alpha Manager Millar Mathieson, and Jonathan Asante, produced impressive returns, but it has had considerably less volatility than its benchmark. 

Unfortunately, a surge of inflows has led to the fund being soft-closed to new money, which is the same story with First State Global Emerging Markets Sustainability.

Rob Gleeson, head of FE research, believes the findings underline the importance of experience to a fund manager's skill set.  

"We were interested to see a convergence in our ratings as 74 of the funds scoring five FE Crowns are managed by people with an FE Alpha Manager rating," he said.

"FE Crowns are based on funds’ three-year returns whereas the FE Alpha Manager ratings look back at individual managers’ performance over a decade." 

He added: "In a volatile, uncertain environment, many investors prefer managers with experience of weathering previous storms and our ratings illustrate the validity of such an approach."