European Smaller Companies - Satellite Investment

Prism

The only two European funds have have on my shortlist are the Threadneedle and Montanaro ones. I used the Threadneedle fund for a few years but never actually bought the Montanaro European fund. I instead switched Montanaro Better World which is around 40% Europe and invests in a subset of the same European companies.

DairyQueen

Audaxer said:

Looking at the Trustnet figures, Montanaro annualised returns are 20.6% over 5 years and 12.7% over 10 years. Threadneedle annualised returns are 14% over 5 years, 13% over 10 years. I wonder why Montanaro has done so much better over the last 5 years? Good luck as I would find it difficult as to which one to select.

Another European fund I like the look of is Baillie Gifford European B Acc with a slightly better 10 year annualised return at 14% but I see that this fund also includes large caps, so probably not the one for you if that is covered elsewhere in your portfolio.

I am a fan of BG and hold a couple of their funds but, as you correctly noted, large caps are covered by the core passives. 

I am still undecided so will continue researching until one or the other appears as a clear winner. I don't (yet) know why Montanaro's performance has been relatively better in recent years. Discovering that may be the lightbulb moment.

There seems to be a forum consensus about the best offerings in this sector and I am grateful for the input.

DairyQueen

I have discovered a few of points of interest:

- Threadneedle lost its long-term manager to Jupiter in April last year. The performance of the fund since doesn't appear to have suffered but it's early days.
- The former manager now runs the newly created Jupiter version of this fund. With such a short track record (inception Feb 2020) it's impossible to say how the Jupiter fund will compare.
- Montanaro appears to have benefited from Sterling weakness over the last 5 years. This could explain it's outperformance. It also suggests that if the £ strengthens significantly the fund's performance will suffer.

Still musing.

Thrugelmir

Audaxer said:

DairyQueen said:

Thanks for the comments.

I am investing for growth rather than yield so either Threadneedle or Montanaro are good fits.  I have no preference for IT or OEIC. At 1.17%, Montanaro's OCF is a tad steep compared to Threadneedle's 0.88%. Both have performed well relative to their (same) index.  

This is a small part of our portfolio and diversification is the primary reason for making this kind of investment so I will look closely at the asset allocation to determine which is the best fit. 

Jury is still out.

 I wonder why Montanaro has done so much better over the last 5 years? 

Narrowing of discount?