Performance evaluation of the Invesco European Growth Fund
The Invesco European Growth Fund Class A (AEDAX) has fallen 3.3% year-to-date (or YTD). Even after this fall, the fund has emerged as an above-average performer in the group of 12 funds chosen for this review.
The past month has been quite poor for the fund, but in the last year, the fund has placed third among its peer group of 12. 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 average performance by the fund YTD.
Contribution to returns
The fund’s two top invested sectors—financials and consumer discretionary, in that order—have been the biggest negative contributors to its returns YTD. UBS Group (UBS) has led financials down, along with real estate services provider Savills and Lloyds Banking Group (LYG).
Had it not been for substantial positive contributions from Russia’s Sberbank and Turkish conglomerate Hacı Ömer Sabancı Holding, the sector would have fared even worse. Meanwhile, SKY has pummeled the consumer discretionary sector. Positive contributions from Kuoni Reisen Holding, RELX Group (RELX), and Publicis Groupe (PUBGY) have reduced some of the negative contributions.
The healthcare sector has also been a major negative contributor to AEDAX’s returns YTD. German biotechnology company MorphoSys is by far the biggest negative contributor among the fund’s holdings from the sector. There is no positive contributor from the sector.
Industrials have helped to reduce some of the drag from negatively contributing sectors. Irish group DCC has been the biggest positive contributor from the sector in the year so far. Though French industrial group Bolloré and Britain’s Ultra Electronics Holdings have dragged on the sector’s contributions, positive contributors have helped the sector to post gains.
Though Switzerland-based food company Aryzta and Ireland-based Origin Enterprises have weighed on consumer staples, positive contributions from British American Tobacco (BTI), Carlsberg (CABGY), and Unilever (UN) have ensured that staples has emerged as a positive contributor.
AEDAX has been in the red in 2016 so far, but it has still outperformed the passively managed SPDR EURO STOXX 50 ETF (FEZ). Stocks in the financial sector in FEZ have weighed heavily on the fund’s performance, even though most other sectors have outperformed their peers in AEDAX.
AEDAX’s portfolio turnover is low, which shows that its management has conviction about its stock picks. The fund has done well in the past, and existing investors may want to stay on board. Prospective investors, especially those with a medium- to long-term horizons, may want to keep AEDAX on their shortlists.
Let’s move on to the second fund in this review, the Columbia European Equity Fund Class A (AXEAX).