The FSA Spy market buzz – 24 March 2023
Bitcoin rolling futures, new fund pricing models gather pace, greenbleaching, sustainable bonds (not), thematic investing at the top; consultant jokes, Munger’s wisdom and much more.
European equities were among the worst-hit asset classes by the pandemic last year, and have performed poorly relative to their global peers.
For the full year 2020, the MSCI Europe Index only returned 5.25%, versus the double-digit 16.82% performance of the MSCI ACWI Index, according to data from FE Fundinfo.
However, the asset class is slowly catching up now, with expectations that the region should benefit from a broader global economy as vaccines are rolled out. Year-to-date, the European index has returned 4.59%, which is close to the global index’s 5.25% performance.
Asset managers generally hold a positive outlook that European equities should recover this year, especially since companies have weathered a difficult 2020.
“Corporate earnings for the third quarter of 2020 were very strong,” Martin Skanberg, portfolio manager at Schroders, said in a report.
“We estimate Europe had the highest proportion of earnings beats in 10 years. This shows that the pent-up demand was there after the first phase of the virus.
“It also demonstrates how companies have been able to control costs, albeit partly through measures such as lack of corporate travel. This should stand them in good stead as the virus impact fades and sets up European companies for a solid earnings recovery in 2021.”
Against this backdrop, FSA asked Darius McDermott, managing director at Chelsea Financial Services, to compare two European equity products: The Aberdeen Standard Sicav II – European Smaller Companies and the MFS European Smaller Companies Fund.
|Size||€1.36bn ($1.62bn)||€513.8m ($612m)|
|Manager||Andrew Paisley||Peter Fruzzetti, Sandeep Mehta|
|Three-year cumulative return||35.51%||21.95%|
|Three-year annualised return||10.76%||6.73%|
|Three-year annualised alpha||4.95||0.17|
|Three-year annualised volatility||24.51||22.01|
|Morningstar analyst rating||Bronze||Silver|
|Morningstar star rating||****||****|
|FE Crown fund rating||****||****|
Part of Mark Allen.