Four years since Brexit: European equities beat UK

In the four years since the UK voted to leave the European Union, European equities have outshone their UK counterparts, with returns three times that of British companies.

The average fund in the IA Europe ex UK sector has returned 42.79%* since the referendum, while the average fund in the IA UK All Companies sector has managed just 14.02%*.

Smaller companies on both sides of the channel have been more equally matched, although European firms still did better: the average IA European Smaller Companies fund returned 38.52%*, compared with 31.58%* for the average IA UK Smaller Companies fund.

Elite Rated funds top their peer groups

When it comes to individual funds, however, there is one particular standout: Elite Rated LF Miton European Opportunities, which has returned 117.53%* over the past four years – some 21%* more than its closest rival in the IA Europe ex UK sector, and almost three times more than the average fund.

The best performing Elite Rated UK equity fund over the period was MI Chelverton UK Equity Growth, which topped the IA UK All Companies sector returning 78.85%* – more than five times the sector average.

Commenting on the findings, Juliet Schooling Latter, research director of FundCalibre, said: “There has certainly been a mismatch in performance between the UK and Europe over the past four years since the referendum.

“Brexit, and the on-going uncertainty, has made the UK unattractive for investors. The concentration of oil and gas, basic materials and financials in our top 100 companies – all ‘value’ and out of favour areas – has not helped performance either. Even lower down in the mid 250, sector bias has not helped, particularly in recent months as travel, tourism and leisure companies are highly represented. In contrast, the weak pound against the euro has boosted overseas holdings. Thankfully, a number of well-managed funds have been able to buck the trend.

“I expect stock market volatility to continue in the next few weeks, as negotiations continue. But hopefully we will get a resolution, some clarity and a clearer path ahead, which would be beneficial to businesses and investors alike.”

Top ten performing Elite Rated European equity funds

RankFund namePerformance over four years*Position in sector
1LF Miton European Opportunities117.53%1/107
2Comgest Growth Europe ex UK81.55%3/107
3Jupiter European77.87%6/107
4BlackRock European Dynamic70.89%10/107
5Legg Mason IF Martin Currie European Unconstrained69.01%11/107
6Marlborough European Multi-Cap62.35%15/107
7Threadneedle European Select62.27%16/107
8T. Rowe Price European Smaller Companies Equity59.80%4/23
9Barings Europe Select52.03%6/23
10Montanaro European Income50.23%31/107

Top ten performing Elite Rated UK equity funds

RankFund namePerformance over four years*Position in sector
1MI Chelverton UK Equity Growth78.85%1/231
2Liontrust UK Micro Cap68.99%3/47
3TB Amati UK Smaller Companies64.64%4/47
4Liontrust UK Smaller Companies62.47%5/47
5LF Gresham House UK Micro Cap52.35%10/47
6LF Lindsell Train UK Equity51.83%8/231
7Marlborough UK Micro Cap Growth51.70%11/47
8TB Evenlode Income46.90%9/231
9Marlborough Multi-Cap Growth42.33%14/231
10Liontrust Special Situations40.22%15/231

 

*Source: FE Analytics, total returns in sterling, 23 June 2016 to 21 June 2020, using the IA UK All Companies, IA UK Smaller Companies, IA Europe ex UK and IA European Smaller Companies sectors.

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Past performance is not a reliable guide to future returns. Remember, all investments can fall in value as well as rise, so you could make a loss. Before you make any investment decision, make sure you’re comfortable and fully understand the risks.Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.