HEAD-TO-HEAD: Allianz Global Investors vs Kempen International Funds

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Pictured: Ronald Van Genderen, fund analyst at Morningstar

European equities remain popular with investors in Asia. In September, 47% of respondents to Fund Selector Asia’s quarterly Asset Class Research survey said they were planning to add to their European equity allocation in the next 12 months. Only 4% said they were planning to reduce their allocation.

Singling out European small caps, data shows that they have outperformed large caps over the past one-, three- and five-years, according to FE data. The MSCI Europe Small Cap index delivered twice the gains of the MSCI AC Europe Large Cap index over the past five years, and triple the gains over the past three years (ending 31 October).

However, European small caps come with risk. Exposure to the UK raises concerns until the Brexit agreement is finalised. The continuing appreciation of the euro versus the dollar will impact small caps that export outside the Eurozone. Small caps also tend to be more volatile than large caps – they tend to react quickly to macronews. Volatility may become more pronounced as Europe reverses its QE programme, or when the Italian elections, with an anti-euro party leading in the polls, are held in 2018.

Against this backdrop, FSA looks at two European small-cap equity funds: the Allianz Europe Small Cap Equity Fund and the Kempen European Small-Cap Fund. Both funds are Sicav products domiciled in Luxembourg. They are available to professional investors in Hong Kong and accredited investors in Singapore.

Data: Morningstar, FE

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