“Where should I be putting my money, Rob?” It’s one of the most common questions I’m asked by family and friends as a financial journalist, and is always met with the response: “You should get some professional advice.” 
I am under no illusions how difficult investing is and while I write about markets and fund managers every day I still have little knowledge on portfolio construction to share, nor would I be allowed to give advice.
After taking some profits largely before the second sell-off of last year in October – more by luck than judgement – I’ve managed to also avoid big losses to my fledgling portfolio.
One of the things I did, however, was to retain the worst performers: not because I have any insight into the market but because I still believe in the long-term strategies.
Among the funds that remains is Marlborough European Multi-Cap.
The five FE Crown-rated £388.1m fund is run by FE Alpha Manager David Walton alongside deputy manager Will Searle. It suffered – along with many others – during the changeable market conditions of last year.
In 2018 Marlborough European Multi-Cap was down by 11.53 per cent compared with a loss of 12.16 per cent for the average IA Europe Excluding UK sector peer.
Performance of fund vs sector in 2018
Source: FE Analytics
I’m not too upset with this outcome, however: no funds in the sector delivered a positive total return last year.
Indeed, the best performer of 2018 was the five FE Crown-rated Jupiter European fund, run by FE Alpha Manager Alexander Darwall, which was down by 0.34 per cent.
At the opposite end of the spectrum, last year’s worst performing fund from the sector – Neptune European, overseen by FE Alpha Manager Rob Burnett – recorded a loss of 24.79 per cent.
What drew me to Marlborough European Multi-Cap at the end of 2017 was diversification. Having (incorrectly) believed that global markets would continue grinding forward together for the near future, I sought to spread my equity exposure among several different regions.
Europe was among those after enjoying a strong year of growth in 2017 – with the eurozone economy outperforming the US for the first time in a while – and shrugging off rising populist movements during elections in key EU member states France and Germany.
Performance of funds & sector average in 2018
Source: FE Analytics
Sitting alongside growth funds investing in the UK, US and emerging markets, I felt confident that Marlborough European Multi-Cap would offer additional geographical diversification (particularly given that it does not invest in UK stocks).
The fund’s largest country weighting is to Sweden at 15.7 per cent of the portfolio, followed by France at 14.8 per cent and Italy at 10.6 per cent, according to the latest factsheet.
What particularly appealed to me – and was consistent with another fund pick I made last year in Standard Life Investments Global Smaller Companies – was its exposure to the small-cap sector.
With what I considered as a more positive outlook for European corporates, I felt that stocks at the lower end of the market capitalisation scale could also be among the continent’s fastest growing companies albeit with some large-cap exposure.
Indeed, Marlborough Fund Managers has established a track record for investing in small-caps, its range including several other well-known funds covering different areas, such as the Marlborough Nano Cap Growth also managed by Walton alongside veteran investor Giles Hargreave.
Bottom-up stockpicker Walton believes that smaller companies have the potential for large upside but are often ignored because of their size. Drawing from a list of 250 companies, the manager constructs a portfolio of just over 100 stocks.
Currently, 29.6 per cent of the portfolio is held in micro-cap companies with a market capitalisation of less than €250m, while a further 29.1 per cent is held in small-cap stocks of between €250m-1bn.
However, my somewhat rose-tinted view of global markets came crashing down around me last year as volatility returned in a big way and the European economy faced fresh challenges from the election of a eurosceptic government in Italy and fall-out from the ongoing US-China trade dispute.
While there were certainly some far worse areas to invest last year than European small-caps (hello, Argentinian equities) it certainly wasn’t the best area either.
Yet, the fund performed well when considered against other funds in the sector with more of a large-cap focus. And I am happy to continue holding it.
Walton – who has been at the helm for more than five years and was latterly joined by deputy Searle early in 2017 – has delivered a total return of 107.84 per cent since he took over the fund in February 2013, compared with a return of just 51.14 per cent for the average IA Europe Excluding UK peer.
Performance of fund vs sector in 2018
Source: FE Analytics
However, as the fund’s key investor information document (KIID) notes, this fund may not be appropriate for somebody who plans to withdraw their money within 10 years.
I can’t get away from last year’s performance and, as I’ve mentioned, I was lucky to emerge relatively unscathed from 2018 having taken small profits in other holdings.
Yet, I’ve learned from the experience and from being a novice investor. Indeed, given the more challenging outlook, it might be some time before I decide to dip my toe back into the world of investing.
And, please, don’t ask me for investment advice.