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The lone outperformer in Europe ex UK equity revealed

The lone outperformer in Europe ex UK equity revealed

Continental Europe has had a tumultuous time over the past half-decade with the currency union and peripheral nations experiencing almost unprecedented levels of turbulence.

Against this backdrop, it is perhaps unsurprising that so few managers in the Europe ex UK equity sector have consistently stayed ahead of the pack.

There are currently 103 fund managers in the sector, while 67 of these have a track record reaching back to August 2009.

Over this timeframe, the average manager investing in the sector returned 65.67% in absolute terms, while the most commonly held benchmark, the MSCI Europe ex UK TR USD, rose 69% over the same period.

Looking at each individual year, however, there is only one manager who achieved outperformance compared to his peers in every 12 month period between August 2009 and August 2014.

So, who is the lone equity specialist posting this stellar outperformance and what is the secret of his success?

Dean Tenerelli, T Rowe Price

Fund: T Rowe European Ex-UK Equity I EUR

Five year total return (August 2009-August 2014): 83.61%

Best period of outperformance vs. average manager: +3.38% in 2011/12

Citywire AA-rated Dean Tenerelli can attest to being the only manager to have beaten the average manager’s return on a consistent basis. The London-based manager has focused his €49 million on quality assets drawn from a diverse array of markets.

This has seen him allocate generously to the European periphery, with Spain and Italy both considerable overweights in his fund. He has 14.8% of the fund in Spain compared to an index allocation of 8.1%, while he has seven percentage points more than the benchmark in Italy.

Meanwhile, France, Switzerland and Germany are well-represented but at slight underweights compared to the index. On a sector basis, Tenerelli favours financials (26%) and consumer discretionary (22%),  while underweighting healthcare and consumer staples.

Speaking to Citywire Global earlier this year, Tenerelli said he is backing the eurozone to increase the speed of its recovery, hence the peripheral exposure. He named the media sector as one to watch for the year ahead.

The largest positions in the fund are currently German insurance group Allianz, Spanish banking group Bankinter and diversified financials group Bolsas y Mercaso Espanoles. The last stock is the strongest contributor to performance in the second quarter of 2014, according to fund documents.

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