Volkswagen and Barclays Take a Toll on AXEAX Year-to-Date in 2015



Performance evaluation

The Columbia European Equity Fund Class A (AXEAX) was down 1.4% in November 2015 from a month prior. In the three- and six-month periods ended November 30, the fund fell 0.3% and 5.9%, respectively.

In the one-year period, the fund has returned -1.0%, while from November’s end to December 22, the fund is down 6.4%. In the YTD (year-to-date) period, the one we’ll be analyzing, the fund is up by 3.0%.

The fund has been a below-average performer among the ten funds in this review. For the YTD period, it stood seventh among its ten peers. Let’s look at what has contributed to this below-average performance.

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Portfolio composition and contribution to returns

AXEAX has been around for over 15 years, having started in June 2000. According to its latest geographical disclosure, companies from the United Kingdom, France, and Switzerland are its top three invested geographies, in that order. France and Switzerland have switched places in the last month.

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

The consumer discretionary sector, the fund’s third-largest in terms of portfolio weight, emerged as the biggest positive contributor to the fund’s returns in the YTD period ended November 2015. Danish retailer Pandora led the sector in terms of positive contribution to returns. However, there was considerable drag on the sector by negative contributions from the preferential shares of controversy-embroiled Volkswagen (VLKAY) and UK-based publisher Pearson (PSO).

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Financials could only manage the second-highest positive contribution to returns, led by UBS Group (UBS). However, UBS’s positive contribution was nullified by negative contribution from Barclays (BCS). Since there were no other major negative contributors, the sector was able to contribute positively to the fund’s returns.

The consumer staples and industrials sectors followed in terms of positive contributions to returns. The former was led by Anheuser-Busch (BUD) and L’Oréal, while the latter was led by Novo Nordisk (NVO).

Individual positive contributors included Airbus Group (EADSY), ARM Holdings (ARMH), and BT Group (BT), while detractors included ASML Holding (ASML), Rio Tinto (RIO), and Novartis (NVS).

Reasons for below-average performance

Detractors were the main reason AXEAX returned a below-average performance for YTD November 2015. Stocks such as Barclays and Volkswagen, among others, dragged on their respective sectors and hurt the fund’s returns for the period.

Let’s move on to the next fund in this review, the Brown Advisory WMC Strategic European Equity Fund Investor Shares (BIAHX).


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