However, improving conditions in the eurozone and the announcement of another round of quantitative easing (QE) in the US mean some are beginning to be tempted by valuations in the battered equity market.
Here are three Europe ex UK portfolios that may be of interest to investors keen to get off the beaten track:
Baillie Gifford European
The five crown-rated fund has beaten its sector over one, three, five and 10 years, with less volatility, but it has only £46m assets under management (AUM).
It has had a particularly good run under current manager Thomas Coutts, who joined the team in November 2008.
Since then, the fund has returned 73.19 per cent, compared with 44.34 per cent from the average Europe ex UK portfolio.
Coutts managed to beat his peers in the up markets of 2009 and 2010 and also protected more effectively against the downside in 2008 and 2011.
Year-on-year performance of fund vs sector
| Name | 2011 returns (%) | 2010 returns (%) | 2009 returns (%) | 2008 returns (%) |
| Baillie Giff - European | -11.75 | 17.38 | 27.27 | -23.18 |
| IMA Europe Excluding UK | -15.57 | 8.57 | 19.42 | -24.96 |
Source: FE Analytics
Coutts has a value bias and invests for the long-term, aiming for an annual turnover of around 20 per cent.
He and co-managers Paul Faulkner and Steven Paice – who joined in June 2010 and April 2011 respectively – currently have a significant position in Sweden, which accounts for almost 20 per cent of AUM, and Switzerland, which accounts for 18.5 per cent.
Peripherals Spain, Italy, Greece and Ireland have a combined weighting of 13.3 per cent.
The fund has a minimum investment of £1,000 and a total expense ratio (TER) of 1.59 per cent.
AXA Framlington European
This £57.7m fund has been managed by the same individual, Mark Hargraves, for far longer than its Baillie Gifford rival.
It is a top-quartile performer over one, three, five and 10 years – a feat matched by only six other European funds.
Over the last decade, the fund has returned 150.51 per cent, outperforming its IMA Europe ex UK sector average by 34.32 percentage points. It has also significantly outperformed in the short- and medium-term.
Performance of fund vs sector over 10-yrs
| Name | 1-yr returns | 3-yr returns | 5-yr returns | 10-yr returns |
| AXA - Framlington European | 22.18 | 20.7 | 10.09 | 150.51 |
| IMA Europe ex UK | 14 | 7.8 | -0.24 | 116.19 |
Source: FE Analytics
It is more volatile than its sector average and tends to outperform in up markets but drops faster when they fall.
The fund is invested predominantly in France, Germany and Switzerland, which have a combined weighting of around 60 per cent. Financials is Hargraves’ biggest sector position, accounting for almost 20 per cent of AUM.
Like the Baillie Gifford fund, AXA Framlington European has a minimum investment of £1,000 and a TER of 1.59 per cent.
GLG Esprit Continental Europe
This £47.3m vehicle is another that has achieved top-quartile status in its Europe ex UK sector over one, three, five and 10 years.
Sandy Rattray has headed up the fund since July 2007, and outperformed his sector average and FTSE Europe ex UK benchmark by around 10 percentage points since this time.
The manager has a number of significant off-benchmark positions in his top-10, including Deutsche Post and Inditex, but is underweight Nestle and Novartis, which are among the most held with European managers.
France and Germany are Rattray’s biggest regional positions, accounting for more than 50 per cent of AUM.
GLG Esprit Continental Europe also has a minimum investment of £1,000, but is slightly more expensive than the other two, with a TER of 1.69 per cent.