A fully flexible way to invest
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Discover five funds from the Barclays Funds List that invest in European shares.
Who's it for? All investors
From Liverpool to Barcelona, Manchester to Madrid, Europe is home to companies that are in a league of their own. Mainland Europe itself is often overlooked by investors who tend to focus more on their home turf by investing in UK companies or look further afield to markets such as the technology space in the US. But Europe should not be consigned to the subs bench. Here, we look at five interesting funds that invest in Europe, which investors may consider promoting to their investment portfolio.
Europe is a market made up of 14 very different countries1 with 14 different underlying economies. And this is what makes it interesting. The largest company in Switzerland, for example, is Nestle, whose biggest selling products include daily staples for all of us – coffee and chocolate. Compare that to the largest company in France, LVMH, whose biggest selling products include Luis Vuitton handbags and Moet Champagne.
It is difficult to imagine two more different companies, each of whom cater for such different ends of the market. But when you dig deeper, they are both quite similar. They are both global companies, which means their sales are not just confined to Europe. And they are both successful at what they do – they have instantly recognisable brands.
Nestle and LVMH perfectly illustrate the investment opportunities in Europe. Fund managers have rich pickings across hundreds of such world-leading companies. Successful companies, which just happen to be based in Europe.
There are five funds on the Barclays Funds List, that invest in the shares of European companies. Each of these funds has a different approach to investing in Europe, and you may well find one that you wish to support.
This fund looks to invest in companies which produce products or services in markets where there are few competitors and where demand for them is consistently strong. Their belief is that, with no or few competitors, these companies can continue to consistently grow their earnings in the future. A good example is sportswear manufacturer Adidas – a successful European company that operates in a growing market, where few competitors exist.
The team at Invesco have a very different approach to Jupiter, where they take a ‘value’ approach to investing. This involves looking for companies who are simply ‘out of favour’ with investors, which means their shares are typically cheaper than the average company. They aim to identify any factors that would potentially make a weak company stronger or a strong company even stronger, and thus result in a rebound in the share price.
Examples include a possible change in management, a change in strategy of the business, or even a change in the market that the company operates in. Today, this means focusing in areas such as telecoms, utilities and energy companies, which have been some of the ‘unloved’ areas of the market over the last few years.
The name of the fund speaks for itself – it aims to deliver an income to investors by buying shares in European companies that pay a high dividend. However, it also aims to achieve strong long-term growth, so as well as generating an income, you will hopefully see the value of your investment increase over time. It does this by applying a more flexible approach to investing than many equity income funds. Rather than investing in large companies, which often pay good dividends, the fund manager tends to look at mid-sized businesses which pay dividends and have strong growth prospects.
The word ‘dynamic’ in the fund’s name is an obvious sign of how this fund invests. Because Europe is a constantly changing investment and economic landscape, it makes sense to take a dynamic and flexible approach to investing. You need to be able to know when sentiment is strong and it’s time to back the winners, yet you also need to understand when markets are ‘not behaving themselves’ and to take a bit of risk off the table. And this is exactly what the team at BlackRock have been doing for many years.
Investing in the shares of smaller companies across Europe, this fund has been managed for the past 20 years by one of the largest and most experienced portfolio management teams in this market, dedicated to investing in European smaller companies. Their core belief is that the lack of investors researching smaller companies in Europe means there are plenty of investment opportunities that are simply overlooked by the market. And having the resources to dedicate to finding these opportunities is what Montanaro is all about.
Investing is a game of two halves. Not only is it about taking a long-term approach, but it’s about finding the right investment funds for you. These five funds are part of the Barclays Funds List. But if you are not a supporter of Europe, there are plenty other areas to invest in and funds to choose from. Find out more information on these funds.
To diversify your investment, you may like to consider our own Barclays Ready-Made Investments (RMI). The RMI are just one example of a range of diversified funds which allow you to select the level of risk you are most comfortable with. These multi-asset funds invest in passive funds across a range of asset classes and regions, offering a globally diversified one-stop solution for investors. Ready-made Investments are not the only funds that we offer and they won’t be appropriate for everyone.
Whichever option you choose, you must accept that all investments can still fall in value as well as rise and you might get back less than you invest.
Past performance of the fund and its manager are not a reliable indicator of their future performance.
We don’t offer personal investment advice so if you’re unsure you should seek that independently.
Funds are designed for the long term so you should only consider them if you can stay invested for at least five years.
These are our current opinions but the future, as ever, is uncertain and outcomes may differ.
Read the Assessment of Value report [PDF, 683KB] for funds run by Barclays.
The value of investments can fall as well as rise. You may get back less than you invest. Tax rules can change and their effects on you will depend on your individual circumstances.
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