The fund, run by star manager Alister Hibbert, will implement higher introductory charges for both intermediaries and private investors in an effort to control its size.
The news will come as a blow to investors and advisers alike, given that it is one of the highest-rated portfolios in the IMA Europe ex UK sector. Hibbert has run the fund since March 2008 and over that time has led it to the top of its IMA Europe ex UK sector, with returns of 84.01 per cent. It beat its benchmark – the FTSE World Europe ex UK index – by more than 60 percentage points.
Performance of fund vs sector and index since Mar 2008
Source: FE Analytics
In light of the news, FE Trustnet asked industry experts to highlight possible alternatives for anyone disappointed by the soft-closure.
Baillie Gifford European
Neil Shillito, director of SG Wealth Management, likes the five crown-rated Baillie Gifford European fund because of the management team’s collective approach.
"The Baillie Gifford European fund caught my eye at the back end of last year," Shillito said. "It is a cracking fund and one of the reasons I like it is the way they run it. There are different tranches which are managed by different teams, so say for argument sakes the fund was £100m, five teams would run £20m each."
"Obviously, they report back to Thomas Coutts who is the lead manager, but it means that each member of the team is highly incentivised to deliver strong performance. It basically means the fund has a best ideas mentality," he added.
According to FE Analytics, the £82.7m Baillie Gifford European fund is a top-quartile performer in the IMA Europe ex UK sector over one, three, five and 10 years.
The best of the those relative performances has been over five years, with the fund returning 59.67 per cent, beating its benchmark – the MSCI Europe ex UK index – by more than 35 percentage points.
Baillie Gifford European has an ongoing charges figure (OCF) of 1.69 per cent and requires a minimum investment of £1,000.
Jupiter European
Shillito is also a fan of the five crown-rated Jupiter European fund, which is headed up by FE Alpha Manager Alexander Darwall. While it is not in the same mould as Hibbert’s BlackRock European Dynamic fund, given its defensive focus, he says it is a good option nonetheless.
Darwall is renowned for taking a strictly bottom-up view of the market and while some of his peers may focus on the macro environment, he concentrates exclusively on company fundamentals such as balance sheets, earnings growth and pricing power.
As a result, he has a much lower turnover than rival Hibbert, which experts say allows the Jupiter fund to have a higher maximum capacity. Jupiter European is £2.3bn in size and remains open to new money.
Darwall’s approach has paid off handsomely in the past: his fund is the third-best performing portfolio in the IMA Europe ex UK sector over 10 years, with returns of 243.81 per cent, beating both the FTSE World Europe ex UK index and the sector by more than 110 percentage points.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The fund has also registered top-quartile returns over three and five years, plus it has had a lower annualised volatility than both the sector and index in the long-run. However, unlike BlackRock European Dynamic it does tend to underperform during fast-rising markets.
Jupiter European has an OCF of 1.79 per cent and requires a minimum investment of £500.
Henderson European Growth
Charles Younes, analyst at FE Research, likes the five crown-rated Henderson European Growth fund. He says it offers something a little bit different, as the managers have found a number of opportunities lower down the market cap scale.
"The managers like to focus on European mid caps which tend to be under-researched and are dominant in more niche markets," Younes said.
"They try to understand the company’s competitive advantage using a strategic approach and interview the company management to confirm their investment theme. They also make sure the valuations are OK and the company is under-appreciated by the market," he added.
The £966m Henderson European Growth fund is co-managed by the FE Alpha Manager duo of Richard Pease and Simon Rowe.
Our data shows the fund is a top-quartile performer in the IMA Europe ex UK sector over three, five and 10 years and has comfortably beaten its FTSE World Europe ex UK sector over each of those time frames.
The fund is a concentrated portfolio of just 43 holdings, with Pease and Rowe favouring the Swiss, German and Dutch equity markets. The regions combined make up more than 60 per cent of the fund’s assets.
Henderson European Growth has an OCF of 1.76 per cent and requires a minimum investment of £1,000.
CF Odey Continental European
Rob Gleeson, head of FE Research, says that investors who want European exposure now should look at the five crown-rated CF Odey Continental European fund.
"Over the past 36 months, FE rates the fund top quartile for alpha generation and for controlling volatility," Gleeson said.
"FE Alpha Manager Feras Al-Chalabi joined Odey in 1999 and has been lead manager of this fund since 2005, proving his mettle through a variety of tumultuous market conditions and delivering returns consistently ahead of his peers."
Since Al-Chalabi took over as manager in February 2005, the fund has been a top-quartile performer, with returns of 125.09 per cent. This compares with the IMA Europe ex UK sector’s 79.32 per cent and the MSCI Europe ex UK index’s 88.57 per cent.
Performance of fund vs sector and index since Feb 2005
Source: FE Analytics
The £242.8m fund is also a top-quartile performer over one, three and five years and as Gleeson points out, has tended to be lot less volatile than the sector and the index.
CF Odey Continental European requires a minimum investment of £5,000 and has an OCF of 1.59 per cent.
Allianz Continental European
Gleeson also likes the five crown-rated Allianz Continental European for investors who want a more robust fund for their European exposure.
"The fund is co-managed by Thorsten Winkelmann and Matthias Born, both FE Alpha Managers who have maintained a consistently high alpha score over both rising and falling markets," he explained.
"Launched in 2002, it is a well-established fund with a focus on large caps and has enjoyed strong outperformance in the last two years."
"The top-10 holdings include respected European companies such as Swiss luxury goods retailer Richemont, Inditex – owners of Zara – and French dairy producer Danone," he added.
The £43.8m Allianz Continental European fund is a top-quartile performer in the IMA Europe ex UK sector over both three and five years.
However, the fund hasn’t participated as strongly as some of its competitors in the recent rally and because of that is currently sitting in the fourth quartile over six and 12 months.
Consumer goods and industrial stocks are the fund’s largest sector weightings, with the managers favouring France and Germany in terms of regional exposure.
Allianz Continental European has an OCF of 1.76 per cent and requires a minimum investment of £500.
