Why Was the Columbia European Equity Fund Below Average?


Nov. 25 2015, Updated 1:58 p.m. ET

Performance evaluation

The Columbia European Equity Fund Class A (AXEAX) rose 5.1% in October 2015 from a month ago. In the three-month and six-month periods ended October 30, the fund fell 5.0% and 3.7%, respectively. However, in the YTD (year-to-date) period, the fund rose 4.5%. Further, it rose 3.7% from a year ago. However, from October’s end until November 23, the fund fell 2.0%. The fund has been a below-average performer among the ten funds in this review. Its performance has placed it in the bottom half for each of the periods under review.

Let’s look at what contributed to this below-average performance.

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Portfolio composition and contribution to returns

The AXEAX has been around for 15 years, having been incepted in June 2000. According to its latest geographical disclosure, companies from the United Kingdom, Switzerland, and France are the top three invested geographies, in that order. This order is the same from last month.

Since the latest complete portfolio of the fund available with us is as of September 2015, we’ll consider that as our base. For October, we’ll consider valuation changes for our analysis. All portfolio percentages mentioned from here on refer to their weights as per changes in valuation from September to October.

Financials, making up nearly a quarter of the fund’s assets, were the biggest positive contributors to the fund’s returns for October 2015. Prudential (PUK) and St James’s Place Plc were the primary contributors from the sector.

Additionally, industrials were on the fourth spot in terms of portfolio weight. But they emerged as the second-biggest positive contributors to the fund’s returns. Airbus Group (EADSY) was the biggest contributor, even though it wasn’t the biggest individual holding from the sector.

Also, the consumer discretionary sector was the third largest sector and its contribution for October also stood at the third spot. It was led by Continental AG even though it wasn’t the biggest individual holding. Intercontinental Hotels Group (IHG) and RELX (RENX) also helped the sector. However, Pearson (PSO) emerged as a major detractor, reducing the contribution of the sector.

Other positive contributors included Fresenius Medical Care (FMS) and Bayer (BAYZF) from healthcare, ASML Holding (ASML) and ARM Holdings (ARMH) from information technology, CRH (CRH) from materials, and BT Group (BT) from telecom services.

Reasons for below-average performance

The fund stood sixth among the ten funds of our series in terms of its October performance. The primary reason for this was that its top picks didn’t emerge as the biggest contributors to returns. Had either of its top picks fired, or had those that fired been the top choices, the fund would have fared better.

Let’s move on the Brown Advisory – WMC Strategic European Equity Fund Investor Shares (BIAHX).


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