Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
It was only last year that Europe was considered one of the hottest places to invest, and we produced research (‘En Garde!’) highlighting the sheer pace at which discounts were narrowing. At the same time, the IA Europe sector was witnessing its highest inflows since 2015. Over a one-year period, to the end of July 2017, the average trust in the sector had delivered NAV total returns of 26% which – supported by that closing discount – translated to share price total returns of 39%. To put that in context, the average fund in the sector outperformed the average fund in any and all of the Investment Association’s other OEIC sectors over the same period.
However, this has all but completely been forgotten and, rightly or wrongly, Europe is now one of the most out of favour regions in the world. Having met with multiple European fund managers, there appears to be a wide discrepancy between the opportunities managers are seeing on the ground in Europe, and the sentiment of retail investors. We look at a range of investment trusts and examine the case for Europe.
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