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The trackers giving most of the Europe’s gains to investors | Trustnet Skip to the content

The trackers giving most of the Europe’s gains to investors

21 June 2023

Trustnet looks at the European passive funds that have delivered the best returns over the past five years.

By Jean-Baptiste Andrieux,

Reporter, Trustnet

European stocks have been among the best performing markets since the beginning of the year, even beating the S&P 500.

The performance of European markets was perhaps best exemplified by LVMH, when it became the first European stock to surpass $500bn (£404bn) in market valuation.

The US market reclaimed its leadership in recent weeks with the surge in interest for artificial intelligence, which has favoured US tech stocks.

Source: FE Analytics

In spite of this, George Dent and Murdo MacLean, members of the investment team on the BNY Mellon Long-Term Global Equity fund, said that Europe remains a “hunting ground” for quality businesses, enjoying market leadership and pricing power.

As a result, investors might want to add a European tracker in their portfolio.

European passive funds often track the performance of the MSCI Europe index, which has firms such as Nestle, LVMH or TotalEnergies among its top 10 constituents.  

Source: MSCI

Over five years, £1,000 invested in the MSCI Europe index would have returned £1,310.42 (or 31%).

Yet, many tracker funds have done better, such as iShares MSCI Europe UCITS ETF, which would have turned £1,000 into £1,326.47.

The next best performing funds are Amundi Index MSCI Europe and HSBC MSCI Europe UCITS ETF, which would have respectively returned £15.72 and £15.43 more than the MSCI Europe index.

Returns of funds over five years for £1,000 invested

Source: FE Analytics

With a tracking error of 0.14%, SPDR MSCI Europe UCITS ETF has been the best at replicating the performance of the index, while Lyxor MSCI Europe (DR) UCITS ETF has deviated the most.

Those two funds are also the most expensive in the list with an ongoing charge figure (OCF) of 0.25%

HSBC MSCI Europe UCITS ETF is the cheapest tracker fund in the list with an OCF of 0.10%.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.