Sector decisions mean Europe actives outpace US

Asset managers such as Allianz Global Investors (AGI) and Amundi are helping Europe’s funds industry set the pace for active managers when compared to poorer performing US counterparts.

This is the essential point made by consultants at Cerulli Associates after taking a favourable look at performance data for active managers versus their index.

Superior performance can sometimes be the result of underweighting one industrial sector, the firm said.

Cerrulli used S&P Global data that showed 90% of active US equity funds tracking the S&P 500 had underperformed over three, five and 10 years to the end of June 2016.

Another piece of data for three-year performance showed that over 60% of Europe equity funds underperformed the S&P Europe 350 – or, “to put it a more positive way”, 36% of the funds matched or beat the index.

“Whether it is the result of the more disparate nature of the European markets or other factors, Europe clearly has more active funds outperforming than the United States,” said Barbara Wall, Europe managing director at Cerulli.

AGI has “sizeable” funds that have outperformed over one, three, five, and 10 years, Wall said, adding: “The funds’ clear sector stances, such as overweighting industrials, seem to have paid off. Some funds can achieve outperformance just by underweighting one major sector.”

Amundi’s Europe Conservative fund has underweighted the finance sector and in the three years to September 2016 gained 29.5%, compared with 18.4% for the MSCI Europe, Wall said.

In its latest Cerulli Edge report about European product trends, Wall said European equity funds with “conviction and strong performance” could lead the way in reversing outflows in the sector.

©2016 funds europe

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