The saga that is Brexit might finally come to a resolution this year, but most European equity funds managed to do well with that uncertainty hanging over their head in 2019.
Within the Australian Core Strategies universe, the Europe equities sector returned 21.41%, over year to 31 December, 2019, according to FE Analytics.
The best performer was BetaShares WisdomTree Europe ETF Currency Hedged (26.21%), followed by ETFS Euro Stoxx 50 ETF (25.9%), Vanguard FTSE Europe Shares ETF (24.03%), UBS IQ MSCI Europe Ethical ETF (23.81%), Platinum European P (19.37%) and Pendal European Share (6.76%).
Top performing fund, BetaShares, did not have any high allocations towards the UK but instead relied on France (32.8%), Germany (30.2%), the Netherlands (10%), Spain (8.7%) and Finland (4.2%), as at 31 January, 2020.
ETFS also shunned UK equities and had its top allocations to France (38.4%), Germany (27.8%), the Netherlands (10.9%), Spain (9.1%) and Italy (5%).
Vanguard’s were UK (26.8%), France (16%), Switzerland (13.9%), Germany (13.5%) and Netherlands (6.1%), as of at December, 2019.
UBS’ were UK (25.4%), France (18.1%), Switzerland (15.2%), Germany (13.8%) and Netherlands (6.3%).
Pendal, which also held 10.7% in the US, were Germany (31.5%), France (20.8%), UK (10.9%), Netherlands (10.4%) and Finland (5.2%).
Both the Pendal and Platinum funds – the only two active funds in the top five – did not beat the European equities sector average.
In their fund commentary, Pendal said it was a tough year for the fund, but there was optimism for 2020 post-UK election.
“Further signs of gradually improving economic conditions and a strong performance from UK equity markets – on the back of the election outcome – propelled European markets a further 1.65% in December to close 2019 with a 26.18% annual gain,” it said.
“The fund’s underweight in UK domestic sectors – dominated by financials and utilities – explains some of the Fund’s underperformance in December.”
ACS Equity Europe sector, year to 31 December, 2019
