The majority of investment commentators have taken the ECB’s bond-buying programme, announced three weeks ago, as a positive development for equities.
According to a recent FE Trustnet poll, almost half of investors have upped their exposure as a result of this development.
Given the low valuations in European markets, investors may be tempted to take a position in a fund focused on the continent.
There are a number of strong options in the closed-ended universe, all of which are on discounts. FE Alpha Manager Alexander Darwall’s Jupiter European Opportunities trust is the stand-out performer, topping its IT Europe sector over one, three, five and 10 years.
The £259m vehicle is much smaller than the flagship Jupiter European fund, which sits in the open-ended universe, but it has outperformed it over all four time periods.
Performance of trust vs fund and index over 10-yrs
| Name | 1-yr returns (%) | 3-yr returns (%) | 5-yr returns (%) | 10-yr returns (%) |
| Jupiter European Opportunities trust | 40.14 | 95.27 | 47.31 | 455.9 |
| Jupiter European fund | 19.57 | 35.32 | 32.74 | 243 |
| FTSE World Europe ex UK Index | 11.11 | 0.09 | -6.97 | 142.37 |
Source: FE Analytics
The trust has a particularly strong record relative to the fund and its benchmark in rising markets. In spite of its stellar returns, it is currently on a discount of 7 per cent. It is 22 per cent geared, making it well positioned to benefit from a recovery in markets.
Performance of fund vs trust and index over 10-yrs
Source: FE Analytics
Jupiter European Opportunities has a total expense ratio (TER) of 1.12 per cent. It is a pan-European portfolio, which means it can also invest in the UK.
Winterflood Securities’ Kieran Drake rates the trust highly.
"We like the trust because of the manager Alexander Darwall," he said. "He has a good approach to stock picking, where he really focuses on the companies on holds."
"These companies tend to be ones that can do well and have done well in uncertain macro environments."
"I think that has come through in the trust’s performance recently – it has not been affected by [events in the eurozone] because the manager holds businesses which have a more global perspective."
Sam Vecht’s BlackRock Greater Europe IT is also an option. This is a Europe ex UK portfolio, with the majority of its assets in non-peripheral countries such as Germany, Switzerland and France. However, it has a 6 per cent exposure to Spain and 4 per cent to Italy.
Vecht has returned 111.17 per cent since taking over in September 2004, compared with 73.25 per cent from the trust's FTSE World Europe ex UK benchmark.
He has also outperformed over one, three and five years, but has fallen well short of Darwall’s Jupiter trust.
BlackRock Greater Europe IT is on a discount of 5.3 per cent and is not geared. It has a TER of 0.89 per cent, but charges a performance fee.
Fidelity European Values has an inferior track record to the other two, but is more of a bargain, currently trading on a discount of 12.7 per cent.
The trust had a poor 2008, 2009 and 2010, but since Samuel Morse took over in January 2011, it has had a reversal in fortune, returning 8.49 per cent compared with losses of 6.09 per cent from its FTSE World Europe ex UK benchmark.
Performance of trust vs index since Jan 2011
Source: FE Analytics
However, in spite of this renaissance, the trust is still on one of the widest discounts in the IT Europe sector.
It is 6.4 per cent geared and has a TER of 0.94 per cent.
All discount/premium data is taken from the trusts’ latest factsheet.