With a broad universe of funds available for sale in Europe, making the right picks can be challenging. One helpful approach is to take a peek into the portfolios of those selecting funds for a living.
Funds of funds make up a significant part of the European asset management industry. Focusing specifically on equity funds of funds, their combined assets under management across Europe amount to EUR 230 billion. What sets these vehicles apart is that rather than directly constructing portfolios of stocks or bonds, they invest primarily in other investment funds and ETFs, delegating part of the security selection process to external managers.
Identifying the Funds Favored by Professionals
The starting point for this analysis is the European universe of funds of funds belonging to Morningstar’s European equity categories. However, interpreting their portfolios is challenging. Many funds of funds belonging to large financial groups invest primarily in products managed by their own groups. In such cases, fund selection may be influenced by the group’s structure and may not necessarily reflect a choice made from the full range of products on the market.
For this reason, funds of funds whose portfolios consist primarily of products from their own management group have been excluded. After applying this filter, the list is reduced to 21 European equity funds of funds. The full portfolio of each fund was then examined, with positions in the underlying funds aggregated across all 21 portfolios.
The objective is to determine which funds account for the largest aggregate investment across the portfolios of these 21 funds of funds. The higher the aggregate weighting, the greater the collective exposure of professional fund-of-funds managers to that particular product.
The results provide an interesting snapshot of professional fund selectors’ preferences. These are the ten funds with the highest aggregate weighting across the portfolios analyzed:
How the 10 Most-Held Funds Have Been Performing
Exane Funds 2 Exane Equity Select Europe
The EUR 785.5 million Exane Funds 2 Exane Equity Select Europe rose 17.79% over the past year. The fund lagged its benchmark, the Morningstar Developed Europe Target Market Exposure Index, by 3.4 percentage points. Over the past three years, the Exane fund rose 13.25%. Over the past five years, the fund has climbed 8.88%.
Eleva European Selection Fund
The actively managed Eleva European Selection Fund gained 21.03% over the past year, outperforming the average fund in the Europe large-cap blend equity category, which rose 17.6%. The fund beat 73% of its peers and performed roughly in line with its benchmark, the Morningstar Developed Europe Target Market Exposure Index. The EUR 9.4 billion fund has gained 15.02% over the past three years, while the average fund in its category is up 12.01%. Over the past five years, the Eleva Capital fund has climbed 11.19%, compared to the 8.15% gain for the category.
Cobas Internacional FI
The EUR 1.2 billion Cobas Internacional FI rose 39.69% over the past year. The gain on the actively managed fund beat the 13.94% gain on the average fund in the global small/mid-cap equity category, outperforming 97% of its peers. The fund beat its benchmark, the Morningstar Global Markets Small-Mid Cap Index, by 17.55 percentage points. Over the past three years, the Cobas fund rose 24.01%, while the average fund in its category rose 8.17%. Over the past five years, the fund has climbed 20.34%, compared to the 3.07% gain for the category.
Eleva Euroland Selection Fund
The actively managed Eleva Euroland Selection Fund gained 22.82% over the past year, outperforming the average fund in the Eurozone large-cap equity category, which rose 16.8%. The fund beat 86% of its peers and beat its benchmark, the Morningstar Developed Eurozone Target Market Exposure Index, by 2.85 percentage points. The EUR 2.1 billion fund has gained 15.32% over the past three years, while the average fund in its category is up 12.73%. Over the past five years, the Eleva Capital fund has climbed 10.62%, compared to the 8.29% gain for the category.
STOXX Europe 600 Index FAM Fund
The EUR 240.4 million STOXX Europe 600 Index FAM Fund rose 19.94% over the past year. The gain on the passively managed fund beat the 17.6% gain on the average fund in the Europe large-cap blend equity category, outperforming 61% of its peers. The fund lagged its benchmark, the Morningstar Developed Europe Target Market Exposure Index, by 1.25 percentage points. Over the past three years, the Fineco fund rose 13.65%, while the average fund in its category rose 12.01%. Over the past five years, the fund has climbed 9.63%, compared to the 8.15% gain for the category.
European Sustainable Stars Equity FAM Fund
The EUR 162 million European Sustainable Stars Equity FAM Fund rose 20.57% over the past year. The fund performed roughly in line with its benchmark, the Morningstar Developed Europe Target Market Exposure Index. Over the past three years, the Fineco fund rose 14.44%. The fund was launched in Dec. 2021.
YourIndex SICAV - MSCI Europe Universal
The passively managed YourIndex SICAV - MSCI Europe Universal gained 22.16% over the past year, outperforming the average fund in the Europe large-cap blend equity category, which rose 17.6%. The fund beat 85% of its peers and performed roughly in line with its benchmark, the Morningstar Developed Europe Target Market Exposure Index. The EUR 524.1 million fund has gained 14.49% over the past three years, while the average fund in its category is up 12.01%. Over the past five years, the Eurizon fund has climbed 10.21%, compared to the 8.15% gain for the category.
LBPAM ISR Actions Focus Euro
Over the past year, the actively managed LBPAM ISR Actions Focus Euro rose 19.99%, while the average Eurozone large-cap equity fund gained 16.8%. The fund outperformed 58.0% of its peers and performed roughly in line with its benchmark, the Morningstar Developed Eurozone Target Market Exposure Index. The EUR 2.3 billion fund has climbed 14.19% over the past three years, outperforming the average fund in its category, which rose 12.73%. Over the past five years, the LBP AM fund is up 10.17%, while the average fund in its category is up 8.29%.
Tocqueville Euro Equity SRI
The EUR 2.6 billion Tocqueville Euro Equity SRI rose 16.86% over the past year. The gain on the actively managed fund was roughly in line with the 16.8% gain on the average fund in the Eurozone large-cap equity category, underperforming 52% of its peers. The fund lagged its benchmark, the Morningstar Developed Eurozone Target Market Exposure Index, by 3.11 percentage points. Over the past three years, the LBP AM fund rose 11.82%, while the average fund in its category rose 12.73%. Over the past five years, the fund has climbed 8.34%, compared to the 8.29% gain for the category.
Amundi MSCI EMU ESG Selection - UCITS ETF AMED
Over the past year, the passively managed Amundi MSCI EMU ESG Selection - UCITS ETF rose 29.37%, while the average Eurozone large-cap equity fund gained 16.8%. The fund outperformed 97% of its peers and beat its benchmark, the Morningstar Developed Eurozone Target Market Exposure Index, by 9.4 percentage points. The EUR 2.4 billion fund has climbed 15.19% over the past three years, outperforming the average fund in its category, which rose 12.73%. Over the past five years, the Amundi fund is up 10.64%, while the average fund in its category is up 8.29%.
