THE MONEY MAKING EXPERT
GLG Continental European Growth which has returned 59 per cent over three years. The fund invests in a number of companies set to benefit as consumer spending picks up post pandemic.
‘A quarter of the fund’s portfolio is invested in consumer-cyclical stocks which should do well as economies recover,’ says Zhao. ‘In the mid to long term, it provides investors with the prospect of capital appreciation and a well-managed downside risk compared to many peers.’
Both Zhao and Hollands rate Liontrust Sustainable Future European Growth, which has returned 59 per cent over three years.
‘The fund has 20 per cent exposure to the German market,’ Zhao says. ‘This means it may suffer short-term price volatility due to protracted coalition negotiations.’
Yet she points out that the fund has a good track record in producing strong returns by investing in companies that achieve resilient growth and are sustainably managed.
Hollands describes the fund as a ‘top pick’ for investors who want to target companies which improve the quality of people’s lives – whether through environmental efficiency, medical advances, or other positive social impacts.
For those looking to invest in smaller European companies, James Carthew at QuotedData recommends Montanaro European Smaller Companies, which is up 134 per cent over three years. ‘Fund manager George Cooke’s focus on quality and growth helped the fund lead the performance tables through the pandemic, but it does not seem to have led to any faltering of returns in the recovery phase,’ he says.
For larger companies, Carthew recommends investment trust BlackRock Greater Europe, up 113 per cent over three years. The secret of the trust’s success, he says, is a focus on companies whose growth is sustainable.
McDermott likes Marlborough European Multi-Cap and Comgest Growth Europe ex UK, which are among the top ten performers in the European fund universe over the past three years.
‘The Marlborough fund has a bias towards small and mid-caps and has a truly exceptional track record,’ he says. It is up 89 per cent over three years.
‘The Comgest fund is more concentrated in quality growth companies and is also extremely well run and consistent,’ he adds. This fund is up 67 per cent over three years.
POSITIVE OUTLOOK AS COMPANY EARNINGS RISE
CARTHEW urges caution for those with a short-term outlook, pointing out that the German post- election talks ‘will be making some investors uneasy’.
‘Markets hate uncertainty,’ he says. ‘It may be that investors are in for a bumpy ride over the next couple of months. However, uncertainty has been the norm for some time now.’
He adds that he believes those funds that have done well for the last few months should continue to thrive.
It is not just wrangling over who runs Germany that will affect the European market in the long term. The fuel crisis, as well as Covid19, will continue to affect company valuations.
But there are some good reasons to be optimistic about how things will play out. Chris Beauchamp, chief market analyst at investment trading platform IG, says the ‘outlook still looks bright for European markets overall, fuelled by improving company earnings’.