Stay in growth, holiday in value?
According to Kevin Murphy, co-manager of Schroder Income fund, there are two environments in which...
Finland was voted the happiest place to live last week. In the Sixth UN World Happiness Report 2018 – which asks people to evaluate the quality of their lives – it topped the table of some 156 countries.
Northern Europe as a whole made a very strong showing: Norway was in second place, Denmark, third, Iceland fourth and Sweden was ninth. Switzerland, the Netherlands, Canada, New Zealand and Australia made up the rest of the top 10. The UK was down in nineteenth place – just behind the US.
We know money can’t buy you happiness, but have these countries’ stock market returns played a part?
Looking back over the same three-year period of the survey, 2015 to 2017, in local currency terms, the best-performing stock market in the top five was Denmark, which was up 41.09%*, followed by Norway which saw gains of 34.79%*. The Icelandic stock market rose 24.18%*, with Finland close behind at 20%*. Switzerland was up 14.79%*. In contrast, the FTSE All Share is up 33.34%*.
For UK investors investing in these stock markets however, the fall in the value of the pound in 2016 would have made quite a significant difference to the returns they made, had they been invested in these areas.
Looking at the same three-year period, but in sterling terms, Iceland returned 75.37%*, Denmark 61.41%*, Norway 42.41%*, Finland 37.27%* and Switzerland 34.91%*.
While the Icelandic stock market is very small – there are just 16 listed companies in the Nasdaq Iceland index – the rest of the top five offer a range of opportunities and there are a number of Elite Rated managers investing in the region.
1. First up is Janus Henderson European Focus. The manager, John Bennett, has a 7.5% weighting to Danish companies, 7.3% to Swiss, 4.4% in Finland and 4% in Norway. His biggest holding is Carlsberg, while he also has Nordea Bank amongst his top 10.
2. BlackRock European Dynamic is heavily overweight Denmark, with a 10.64% allocation compared with 3.81% for the benchmark. 3.2% of this is invested in Novo Nordisk, the Danish multi-national pharmaceutical company. The manager also has a 14.17% allocation to Swiss companies.
3. Marlborough European Multi-Cap has holdings in Norway (5.7%), Denmark (4.8%) and Finland (4.4%). Manager, David Walton, likes Danish hearing aid manufacturer William Demant, which has had strong sales on the back of a new hearing aid launch. Norwegian discount retailer Europris and IT consultant Crayon also feature in the portfolio, as does Ramirent Oyi, a Finnish company that rents out construction machinery and equipment.
4. T. Rowe Price European Smaller Companies Equity has holdings in four out of the five happiest countries, with 3.7% in Switzerland, 2.4% in Finland, 2% in Denmark and 0.9% in Norway.
5. And finally, Jupiter European has a punchy 8% invested in Novo Nordisk, which makes up the majority of the fund’s 12% allocation to Denmark. The manager also has 2.9% invested in Norway.
*Source: FE Analytics, 1 January 2015 to 31 December 2017. Using MSCI Denmark, MSCI Finland, MSCI Norway, MSCI Switzerland, FTSE All Share and Nasdaq Iceland.
**All fund holding data as at 28 February 2018, information taken from fund factsheets.