In the latest in our series on fund ideas for this year's Isa, we name some top European fund picks
In the latest of our regular series of fund ideas for this year’s Isa , we take a look at some of the best European funds that are available to British savers.
A couple of years ago the vast majority of Isa savers were quite rightly avoiding Europe like the plague. In the summer of 2011 the Continent was facing an economic meltdown after a number of its members racked up an enormous amount of debt. Some countries, including Greece, nearly defaulted.
Three years on, this seems a distant memory. Troubled European nations have got their houses in order through implementing a variety of measures to stop debt levels spiralling out of control.
Experts argue that as Europe’s economy is finally showing signs of recovery, long-term Isa savers should consider having a small portion of their portfolio in a European fund, of, say, only 10pc, as risks still remain.
As Europe has been out of favour, experts argue now is the best time to have a small amount of exposure as fortunes for the stock markets across the Continent are expected to improve. Here are five fund ideas the best in the business are backing.
Threadneedle European Select
One of the best-performing funds over five years. Managed by up-and-coming star investor David Dudding, this fund navigated its way through the European crisis by doubling investors’ money over the past five years. Mr Dudding buys shares in what he perceives to be the strongest franchises Europe has to offer. One of the fund’s biggest holdings is Anheuser-Busch InBev, the world’s largest brewer, which owns Budweiser and Stella.
Five-year return: 124pc (turning £10,000 into £22,400)
Fund manager Stephanie Butcher hunts for bargains across the Continent, snapping up shares that are out of favour or overlooked by other investors. At present Ms Butcher is finding value in Spain, an area that other European funds are avoiding. Ms Butcher has 10pc of the fund in the region, owning shares such as Repsol (TLO: REP-U.TI - news) , the oil and gas firm. As well as providing strong returns in recent years, the fund pays out an income to investors, currently yielding 2.6pc.
Five-year return: 105pc (turning £10,000 into £20,500)
Henderson European Growth
Run by one of the most experienced European investors in the business, Richard Pease, this fund is described as a buy-and-hold for the long term. The fund manager buys shares in companies with large foreign sales exposure, such as Swiss drug maker Novartis (Xetra: NOT.DE - news) . The fund has minimal exposure to peripheral European economies, so suits the more cautious saver. Mr Pease has been buying shares in Europe for nearly three decades, previously managing money for Jupiter Asset Management and New Star.
Five-year return: 116pc (turning £10,000 into £21,600)
Argonaut European Alpha
For those willing to take on more risk, experts named Argonaut European Alpha as the top fund pick for the aggressive investor. The fund carries out rigorous analysis to identify cheap European shares. At present the fund has big stakes in peripheral European economies, including Greece. Fund manager Barry Norris is described by many brokers as one of the best European share pickers around.
Five-year return: 135pc (turning £10,000 into £23,500)
Jupiter European Opportunities Investment trust
This investment company is a favourite with brokers. Fund manager Alexander Darwall makes punchy calls on sectors that he believes are undervalued by the wider market. Mr Darwall currently favours pharmaceuticals, with Danish firm Novo Nordisk (Other OTC: NONOF - news) one of the fund’s top holdings. The company also has 30pc of its assets in UK shares that derive a large portion of their revenues in Europe, holding chemical firms Croda International (Other OTC: COIHF - news) and Johnson Matthey (LSE: JMAT.L - news) . Investment trusts have the ability to borrow money to buy shares, a practice known as gearing. The company geared more than 10pc of its assets since the financial crisis, which is why its performance is well ahead of its peers over the past five years.
Five-year return: 252pc (turning £10,000 into £35,200)
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