Performance evaluation of the JPMorgan Intrepid European Fund
The JPMorgan Intrepid European Fund – Class A (VEUAX) has been a below-average performer year-to-date. It placed ninth in the one-year period until October 21 in the group of 12 funds chosen for this review. However, the past three months have been much better for the fund. We have graphed its performance against two ETFs: the Vanguard FTSE Europe ETF (VGK) and the iShares MSCI Eurozone ETF (EZU).
Let’s look at what has contributed to the fund’s below-average performance in YTD 2016.
Contribution to returns
Although VEUAX’s exposure to the financials sector has been reduced, it remains the biggest negative contributor to the fund in the year so far. There is no single large negative contributor. Small negative contributions from French insurer AXA, Swiss financial services provider UBS Group AG (UBS), Italian banking company UniCredit S.p.A. (UNCFF), and UK-based Prudential plc (PUK) have hurt the sector.
The consumer discretionary sector has been an eyesore as well. ITV plc, Next Plc, and Taylor Wimpey are some of the major negative contributors from the sector. Valeo SA and Adidas AG (ADDYY) have contributed positively, but their combined contribution has not been able to do much to reduce the overall negative contribution.
Healthcare and telecom services have also been sizable negative contributors. While Novo Nordisk A/S (NVO), Roche Holding AG (RHHBY), and GlaxoSmithKline plc (GSK) have wounded healthcare, BT Group plc (BT) has hurt telecom services.
The materials sector has done the most to reduce the negative contribution by the aforementioned sectors. Aperam S.A. and Rio Tinto plc (RIO) have helped materials with help from Glencore Plc (GLNCY). At the same time, Royal Dutch Shell plc (RDS.A) and BP plc (BP) have powered the energy sector.
Marine Harvest ASA (MHG), Koninklijke Ahold N.V. (AHONY), and Nestlé S.A. (NSRGY) have helped consumer staples remain in the green. Gains in the industrials sector due to stocks like Siemens (SIEGY) and ABB Ltd. (ABB) have been muted because of negative contributors like Nordex SE and Air France-KLM SA (AFLYY), among others.
VEUAX has not had much good news in 2016 so far. The past three months have been better, but it’s too short a timeframe to provide any conclusive proof of a turn in performance. A factor worthy of note is its extremely high portfolio turnover.
Given its poor performance, the high rate of churn has not worked for this fund. It may even seem that the improved performance in the last three months is more a matter of luck than skill. For now, investors should 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).