JPMorgan European Fund’s Performance Shaping Up to Be Forgettable

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Updated

Performance evaluation of the JPMorgan Intrepid European Fund

The JPMorgan Intrepid European Fund Class A (VEUAX) has fallen 7.6% YTD (year-to-date), making it the worst performer in the group of 12 funds chosen for this review.

In the last year, the fund placed second last. 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 forgettable performance by the fund YTD.

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Contribution to returns

Even though VEUAX’s exposure to financials stocks has been reduced, they’ve remained the biggest negative contributors to the fund in the year so far. French insurer AXA and Swiss financial services provider UBS Group (UBS) have been the most harmful to the sector. Other negative contributors include Banco Santander (SAN), Aviva (AV), and Prudential (PUK).

The consumer discretionary sector has been an eyesore as well. Next, Taylor Wimpey, Continental (CTTAY), and ITV are some of the major negative contributors from the sector. Adidas (ADDYY) has led the positive contributors, but their combined contribution hasn’t been able to do much to reduce the sector’s overwhelmingly negative contribution.

Information technology and telecommunications services stocks have also been sizable negative contributors. While Auto Trader Group and Nokia (NOK) have held down technology stocks, BT Group (BT) has hurt telecommunications services stocks.

Consumer staples stocks have done the most to reduce the negative contributions of the above-mentioned sectors. Nestlé (NSRGY), British American Tobacco (BTI), Koninklijke Ahold (AHONY), and Marine Harvest (MHG) have helped the sector. However, Suedzucker did eat into some of these positive contributions.

The energy sector, led by Royal Dutch Shell (RDS.A) and BP (BP), has also emerged as a major positive contributor. Meanwhile, Enel (ESOCF) has helped utilities.

Investor takeaway

VEUAX has not been enjoying 2016. The financials and consumer discretionary sectors have been especially harmful to its returns, and most other positively contributing sectors (except consumer staples and energy) have barely done enough to make a small dent in the overall negative contribution.

VEUAX’s portfolio turnover is very high. Given its return performance, this high rate of churn hasn’t worked for the fund. At present, its sectoral composition, barring a few sectors, is quite close to its benchmark. It remains to be seen whether the fund’s management will be more benchmark-aligned going forward. Until then, investors may want to look at other funds for investing in Europe.

In the next article, let’s take a look at the Vanguard European Stock Index Fund Investor Shares (VEURX).

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