What are we looking for?
The debt and banking crises in Europe have contributed to volatile markets in the region over the past few years, and that has weighed on European equity funds. But while the region is still unstable, market performance has improved somewhat recently. We took a look at fund returns over the last six months.
We ranked the eight leaders and laggards over the six months ended April 30. U.S. dollar, segregated and duplicate versions of funds were excluded.
What did we find?
European stocks have had a good run in recent weeks, with the MCSI Europe Index climbing to highs not seen since 2008.
The Chou Europe fund comes out ahead, having produced a 24.6-per-cent gain in the six months to April 30. At the bottom of the pile is the AGF European Equity Class, with a return of 9.7 per cent in the same period.
But Chou Europe’s fund manager, Francis Chou of Toronto-based Chou Associates Management Inc., has a hard time attributing the success to any particular stock because he’s a value investor, and focuses on long-term performance. “It’s buy and hold, and I’m always worried,” he says of his investments.
Mr. Chou prefers to look at the five-year period, during which time the fund returned 2.3 per cent. “Mostly what we bought five years ago has been doing well,” he said.
A search through the fund’s top holding reveals that several of Mr. Chou’s stock picks have been solid performers. The fund is invested in a few pharmaceutical companies including Sanofi SA, which saw its stock rise 21.3 per cent in the six months to April 30. Drug makers AstraZeneca PLC and GlaxoSmithKline PLC also returned roughly 15 per cent in that time period.
Ryanair Holdings PLC, an Irish airline that operates flights between European destinations, posted strong gains. Its stock was up 32 per cent.
And the management expense ratio of 0.25 on the fund isn’t a printing error. In 2009, Mr. Chou made the decision to rebate management fees collected on the Chou Europe fund back to September, 2003. “I rebated the fees because the fund wasn’t doing well,” he said. But Mr. Chou said he expects that will end this year.