Performance evaluation of the Virtus Greater European Opportunities Fund
The Virtus Greater European Opportunities Fund Class A (VGEAX) has risen 0.1% year-to-date (or YTD). It’s one of only two funds to have reported gains in 2016. This has made it the second best performer in the group of 12 funds chosen for this review.
In the last year, the fund has emerged as the best performer. 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 the fund’s strong performance YTD.
Contribution to returns
VGEAX’s high exposure to consumer staples stocks has paid off, as the sector has emerged as the biggest positive contributor to VGEAX in 2016 so far. British American Tobacco (BTI) has been the largest positive contributor from the sector, closely tailed by Philip Morris International (PM). Unilever (UN) and L’Oreal (LRLCY) have also been among the sector’s major positive contributors.
Materials stocks have also been major positive contributors to VGEAX. The ordinary shares and the ADR (American depositary receipt) of Randgold Resources (GOLD) have led to a rise in the sector. Meanwhile, Accenture (ACN) has nearly single-handedly led the technology sector.
The financials and consumer discretionary sectors are a close first and second in terms of negative contributions for the year. UBS Group (UBS) has weighed heavily on financials, with Lloyds Banking Group (LYG) hurting the sector as well. Meanwhile, Barratt Developments has led the consumer discretionary sector down.
The fund has done quite well in 2016 so far. However, its lack of exposure to energy sector stocks has weighed on its returns, as positive contributions from other sectors haven’t been able to match the rise in energy stocks.
Still, the fund’s management has done a great job with such a small and comparatively concentrated portfolio. Its unique positioning has delivered a portfolio with turnover that’s not very high. Investors who aren’t convinced about the fund’s fit in their investment portfolios can certainly consider it as a complement to a more traditional active or passive fund.
In the last part of this series, we’ll take a look at the overall picture that emerges from this analysis.