How Stock Picks Helped the Europe-Focused AEDAX in September


Nov. 11 2015, Updated 12:04 a.m. ET

Performance evaluation

The Invesco European Growth Fund Class A (AEDAX) fell by 1.8% in September 2015 from the previous month. In the three- and six-month periods ending on September 30, the fund fell by 6.1% and 2.0%, respectively. However, in the YTD (year-to-date) period, the fund was up by 0.9%—one of only four funds under review in this series to have posted positive returns in the selected period.

The fund’s performance has been very consistent, figuring among the top three funds across all periods in our review. Now let’s look at what has contributed to this robust performance.

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Portfolio composition and contributions to returns

AEDAX has a long track-record, having been incepted in November 1997. According to its latest geographical disclosure, companies from the United Kingdom, Switzerland and Germany are the top three invested geographies, in that order.

The latest complete portfolio available for AEDAX is as of June 2015. We’ll thus take that portfolio as our base and consider valuation changes as they stood at the end of September 2015 for our analysis. All portfolio percentages mentioned from here on will refer to holding weights according to changes in valuation between June and September.

Let’s look at a breakdown of AEDAX’s holdings:

  • Consumer discretionary and financials are the core of the portfolio, forming ~48% of the fund’s assets.
  • Industrials are a distant third, forming 17.5% of the fund’s portfolio.
  • All other sectors have less than 6% exposure.

Here’s how these sectors contributed to the fund:

  • Industrials emerged as the biggest negative contributor to the fund’s overall returns for September 2015. They were led down by France-based electrical equipment manufacturer Schneider Electric SE. The UK’s (United Kingdom’s) Smiths Group and Switzerland’s ABB (ABB) also led the sector down.
  • The consumer discretionary sector followed industrials in terms of negative contributions to returns. Kuoni Reisen Holding led the sector down. However, positive contribution by the UK’s RELX PLC (RELX) helped reduce the quantum of the negative contribution. Adidas AG (ADDYY) was also a positive contributor from the sector.
  • Among other stocks, while Ericsson (ERIC) was a positive contributor to returns, Israel Chemicals (ICL) was a negative contributor to returns.

Reasons driving performance

Strong stock picks drove AEDAX’s robust performance during the selected period. Except materials, there was no sector in which at least one stock did not contribute positively to returns. This helped reduce the negative contribution from each sector, thus reducing the drag on the fund’s overall performance in September. But a complete disclosure of September’s holdings would help us confirm this assertion.

Continue to the next part of this series for a look at the second fund in our review, the Columbia European Equity Fund Class A (AXEAX).


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