Performance evaluation of the Ivy European Opportunities Fund
The Ivy European Opportunities Fund Class A (IEOAX) has fallen 7.5% YTD (year-to-date). This poor performance has placed it second last in the group of 12 funds chosen for this review.
Though IEOAX’s past three months have been relatively good, its one year point-to-point returns are below average. We’ve graphed its performance against the Vanguard FTSE Europe ETF (VGK) and the iShares MSCI Eurozone ETF (EZU).
Let’s look at what has contributed to this poor performance by the fund YTD.
Contribution to returns
Financials, one of the four core sectors in which IEOAX invests, has been the biggest negative contributor to the fund’s returns YTD. Barclays (BCS) has easily been the biggest individual negative contributor from the sector. Intesa Sanpaolo (IITSF), HSBC Holdings (HSBC), and Prudential (PUK) have been major detractors also.
Information technology stocks have also contributed negatively in the year so far. Wirecard and JUST EAT have hurt the sector. While BT Group (BT) has led telecommunications services down, Randstad Holding and Ryanair Holdings (RYAAY), among others, have led industrials into the red.
There hasn’t been much in terms of positive sectoral contribution. Only consumer staples and energy have contributed positively. Investing in Marine Harvest (MHG) has been a boon, as it has lifted consumer staples.
Meanwhile, though Royal Dutch Shell (RDS.A) and Total (TOT) have fueled the energy sector, a sizable negative contribution from Genel Energy has capped the sector’s gains.
IEOAX has had a poor 2016 so far. Except for financials, no sector of the fund has been able to do better than its peer in the SPDR EURO STOXX 50 ETF (FEZ). Given its poor performance, its high portfolio turnover is also an area for concern.
Both existing and new investors may want to look at other options for investing in Europe. Those who can exercise patience may want to choose to stick with the fund, as its new manager took up the reins only two years ago.
In the next article, we’ll take a look at the Putnam Europe Equity Fund Class A (PEUGX).