European stock market funds that have stood out over the last 10 years
26 JUN, 2023
By Constanza Ramos
Over the past year, investors have faced great uncertainty and volatility in financial markets. Many prospects suggest that this uncertainty will continue in the coming months. It is therefore crucial to consider the inclusion of solid investment funds in our portfolio, capable of facing the challenges ahead.
In this article, we are going to introduce you to the five best European equity funds of the last decade, as well as the companies in which they invest. These funds belong to the European equity category with flexibility in capitalization, based on data provided by Morningstar.
The best European stock funds
| ISIN | Investment fund | 10-year yield | YTD Profitability |
| LU0418791066 | BlackRock Strategic Funds - European Opportunities Extension | 15,50%% | 14,18% |
| LU0870552998 | DNCA Invest SRI Europe Growth | 10,80% | 11,74% |
| IE00BHWQNN83 | Comgest Growth Europe Opportunities | 10,59% | 15,07% |
| LU0578133935 | Memnon Fund - Memnon European | 10,50% | 11,46% |
| LU0289527912 | Melchior Selected Trust - European Opportunities | 9,21% | 8,08% |
Source: Morningstar as of 2 June 2023.
Melchior Selected Trust – European Opportunities
The Fund's primary objective is to achieve long-term capital growth, while avoiding excessive risk, through diversified investment. At least two thirds of its total assets will be invested in equities and bonds issued by companies domiciled or predominantly active in Europe, as well as bonds issued by European governments or government agencies. In addition, up to one third of the assets may be invested in other equities, bonds, collective investment schemes and bonds issued by supranational organisations worldwide.
The fund is managed by David Robinson, who has been managing funds for Dalton Strategic Partnership (DSP) since May 2010. David's objective is to outperform the MSCI Pan European benchmark index by more than 3% annualized, through long-term investment in European equities.
David uses a bottom-up approach to stock selection, seeking high quality companies with strong fundamentals that are leaders in niche markets with high barriers to entry. This unconstrained approach results in a concentrated portfolio of 40-60 stocks, typically with absolute volatility below market volatility.
Melchior Selected Trust Positions - European Opportunities
Source: Polar Capital as of 28 April 2023.
Memnon Fund – Memnon European
The primary objective of this fund is to achieve optimal long-term capital growth by investing primarily in equities listed on regulated markets in Europe. These stocks will be issued by companies domiciled in Europe. To achieve this objective, the fund will conduct thorough fundamental analysis when selecting stocks in which to invest.
The fund's strategy focuses on holding a concentrated portfolio composed of stocks from a variety of European countries and sectors. Major holdings in the portfolio include companies such as Shell, Continental, Carrefour, Kering and Siemens. The industrials sector represents the largest weight in the portfolio with 18.74%, followed by consumer cyclicals and health care.
The fund seeks to take advantage of long-term growth opportunities in the European market by diversifying its investments in leading companies in different countries and sectors. Through an approach based on detailed stock analysis, the fund seeks to maximize the potential for capital growth for investors over time.
Memnon Fund - Memnon European Positions
Source: Morningstar as of 28 February 2023.
Comgest Growth Europe Opportunities
The Comgest Growth Europe Opportunities fund is distinguished by its focus on the pursuit of concentrated quality growth, aiming to achieve annual EPS growth of 15% over 5-year periods. The management team carefully constructs a portfolio of 35-40 stocks based on careful analysis and without regard to the benchmark.
The largest position in the fund's portfolio is ASML, with a weight of 8.1%. This Dutch company is involved in the manufacture of lithography equipment needed to print semiconductors. ASML's equipment plays a crucial role in maintaining Moore's Law, which states that the computing power of chips doubles every two years. This means that everything from cars to smartphones becomes more powerful over time.
Comgest Growth Europe Opportunities Fund Positions
Source: Comgest as of 30 April 2023.
DNCA Invest SRI Europe Growth
The objective of this fund is to outperform pan-European equity markets over the recommended investment period. For back-testing purposes, the STOXX EUROPE 600 Net Return EUR index, which includes reinvested dividends, is provided. Importantly, the fund is managed on a discretionary basis and incorporates environmental, social and governance (ESG) criteria.
To achieve its investment objective, the fund's strategy is based on discretionary active management, with the objective of investing in high-quality, high-growth stocks across Europe. The selection process focuses on identifying the intrinsic value of each stock through an in-depth internal analysis of its fundamentals, without considering the composition of the benchmark index. In summary, the three main characteristics of the fund are as follows:
DNCA Invest SRI Europe Growth Positions
Source: DNCA as of 28 April 2023.
BlackRock Strategic Funds – European Opportunities Extension
The fund seeks to maximise total returns through a spread strategy. This means that, in addition to having up to 100% of the fund's assets exposed to common stocks through long or synthetic positions, synthetic short positions will also be taken to gain additional investment exposure. The profits generated by these synthetic short positions will be used to acquire further synthetic long positions, in proportion to the short positions held.
The BSF European Opportunities Extension Fund aims to gain at least 70% of its exposure to companies domiciled in Europe or conducting the majority of their economic activity in the region. To achieve this objective, at least 70% of the Fund's total assets will be invested in equities and related securities (including derivatives), and where appropriate, money market and quasi-monetary instruments. In addition, at least 50% of the exposure shall be to small and mid-cap companies. Small and mid-cap companies will be defined as companies in the bottom 30% in terms of market capitalization on the European equity markets.
The Fund's exposure to currency risk will be managed flexibly. In order to meet the investment policy and objective, the Fund will invest in a variety of investment instruments and strategies. Maximum use will be made of the ability to invest in derivatives providing synthetic long or short positions, with the objective of maximizing positive returns.
BlackRock Strategic Funds – European Opportunities Extension Positions
Source: BlackRock as of 28 April 2023.
