The JPMorgan Intrepid European Fund Class A (VEUAX) rose 4.7% in October 2015 from a month ago. The fund fell 4.4% in the three months ended October 30, and 2.6% in the six months ended on the same date. In contrast, the fund rose 4.3% year-to-date and rose 2.9% from a year ago. However, from October-end until November 23, the fund fell 2.8%. It was among the above-average performers for the three-month and six-month periods ended October 30.
However, the fund stood seventh among the ten funds in this series for the one-month period as well as year-to-date. For the one-year period, it emerged as the second worst performer.
Let’s look at what contributed to the fund’s poor October performance.
Portfolio composition and contribution to returns
The VEUAX has been in existence since November 1995. That is, it existed before the euro became the official currency of the Eurozone, so the fund has quite a bit of track record. According to its latest geographical disclosure, companies from the United Kingdom, France, and Germany are the top three invested geographies, in that order.
The latest complete portfolio available for the fund is as of September 2015. Hence, we’ll take that portfolio as our base and consider valuation changes as they stand at the end of October 2015 for our analysis. All portfolio percentages mentioned from here on refer to their weights as per changes in valuation from September to October.
Financials led all sectors in terms of positive contribution to the fund’s returns for October. The sector’s contribution was led by France’s AXA SA. The United Kingdom’s Land Securities Group and Prudential (PUK), as well as Switzerland’s UBS Group (UBS), also contributed substantially.
Industrials followed financials in terms of quantum of contribution to the fund. Germany-based Nordex SE led positive contributors, followed by Denmark’s Vestas Wind Systems A/S. Siemens Aktiengesellschaft (SIEGY) and OSRAM Licht (OSAGY) were also among the positive contributors while the sponsored ADR (American depositary receipts) of Ryanair Holdings (RYAAY) was among the negative contributors.
Reasons for poor performance
The fund’s stocks picks didn’t have a great October. Though most picks contributed positively to returns, their levels were not quite high enough to propel the fund further. A high rate of turnover didn’t give securities enough time to display their potential. It’ll be interesting to see if the rate of turnover for this fund remains this high going forward.
In the next article, let’s take a look at the Vanguard European Stock Index Fund Investor Shares (VEURX).