Jupiter European is one of four funds to share the top spot in the IA Europe ex UK consistent-performance table, beating the MSCI Europe ex UK index, the most common benchmark in the sector, in nine of the past 10 calendar years.
Vanguard FTSE Developed Europe ex-UK Equity Index, T. Rowe Price Continental European Equity and Schroder European are the other funds that managed this feat.
Performance of funds vs sector and index
Source: FE Analytics
Of the 79 funds with a track record long enough to be included in the study, another seven funds beat the index in eight of the past 10 calendar years.
Jupiter European is run using bottom-up analysis, with the aim of identifying high-quality, high-return businesses whose equity is mispriced or undervalued by markets.
Most of the fund’s outperformance over the past decade came under former manager Alexander Darwall, who was replaced by Mark Heslop and Mark Nichols in October 2019.
However, while Jupiter European was dropped from many buy-lists when Darwall left, investors quickly received a major boost from the new management team. Heslop and Nichols began to sell out of Wirecard, one of the largest holdings in the fund, upon taking over and received an average price of €130 a share.
Last year, Wirecard announced €1.9bn was missing from its accounts and was declared insolvent. It now trades at €0.69 a share. The company made up 17 per cent Darwall’s European Opportunities Trust at one point.
Jupiter European returned 218.18 per cent over the 10-year period in question, compared with 118.38 per cent from the IA Europe ex UK sector and 106.67 per cent from the MSCI Europe ex UK index.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The £4.4bn fund has ongoing charges of 0.99 per cent.
As well as beating the MSCI Europe ex UK index in nine of the past 10 calendar years, Jupiter European also beat the sector in eight of these, a feat it shares with T. Rowe Price Continental European Equity.
T. Rowe Price Continental European Equity is a high-conviction, style-agnostic portfolio of around 40 to 70 mid-to-large European stocks. Manager Tobias Mueller analyses both businesses and industry dynamics in a bid to unearth quality companies that are characterised by a high return on capital employed and have the potential to deliver consistent returns.
“A disciplined approach to valuation is central to our approach,” said a statement from the group.
T. Rowe Price Continental European Equity made 161.85 per cent over the 10-year period in question.
The UK version of the fund is £3.3m in size and has ongoing charges of 0.82 per cent.
It is worth noting that current manager Mueller has only been in charge of the fund since July last year and the majority of the 10-year outperformance came under former manager Dean Tenerelli.
Next up is Schroder European, headed up by Martin Skanberg, which has beaten the sector in seven of the past 10 years. The manager is not tied to a particular style – he said the market has not priced in the enormous growth opportunities in semiconductors and healthcare and partly attributed the fund’s outperformance last year to his tech exposure. However, he said the combination of stimulus measures and economic recovery will likely cause inflation, which tends to favour more lowly valued parts of the market.
“We could see a rotation into these kinds of stocks, particularly those in the materials sector that are aligned to the commodity cycle,” he explained.
“The Q4 earnings season has so far been very strong, especially in cyclical stocks. We are starting to see dividends and share buybacks reinstated in some sectors, such as industrials, though they remain suspended for eurozone banks.”
He added: “Europe looks attractively valued compared with other regions and this is supported by the now-rising dividend yield.”
Data from FE Analytics shows Schroder European made 137.27 per cent over the 10-year period.
The £1.3bn fund has ongoing charges of 0.91 per cent.
Although Vanguard FTSE Developed Europe ex-UK Equity Index is a passive fund, it was able to outperform the MSCI Europe ex UK as it focuses on a slightly different benchmark, the FTSE Developed Europe ex UK.
There is little to choose between the two indices in terms of their focus – both hold large- and mid-cap stocks in developed Europe, excluding the UK. However, the FTSE index holds more stocks: 446 compared with 344. These 102 extra stocks are from further down the market-cap spectrum, where there tends to be more opportunity for higher growth.
Vanguard FTSE Developed Europe ex-UK Equity Index made 114.69 per cent over the 10-year period in question.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
The £2.7bn fund has ongoing charges of 0.12 per cent.