Investors may be starting to look at Europe again (read our big theme) but one fund which has not done well over the past few years is Neptune European Opportunities (GB0032308594), which has been included in wealth adviser Bestinvest's Spot The Dog list of underperforming funds. This is a list of UK domiciled unit trusts and open-ended investment companies that have failed to beat a relevant benchmark over three consecutive 12-month periods, and have also underperformed this benchmark by 10 per cent or more over the three years to 30 June 2013.
Bestinvest found that over three years this fund made a return on £100 of £116, as opposed to a 132.47 per cent increase for FTSE World Europe ex UK index, a relative return of -12 per cent.
This fund has also not done well against its peers in the Investment Management Association (IMA) Europe ex UK fund sector. According to Trustnet data the fund is among the bottom 25 per cent of performers over, one, three and five years.
"This is a reasonably high profile fund but the manager has struggled to adapt his process to the fluctuating sentiment resulting from unprecedented monetary stimulus witnessed in recent years," said Bestinvest.
However, since launch in 2002 the fund is well ahead of its benchmark, MSCI Europe ex UK, and the third best performing fund out of 58 in its sector with a return of 269 per cent. The fund's manager, Rob Burnett, also argues that after a difficult 2012 and first quarter of 2013, performance is turning.
During 2012 the fund invested in some shares outside its benchmark which did not do well but have since been sold. It is now heavily invested in cyclical shares in sectors such as financials, industrials and autos which cost performance in March but over the last three months have done quite well, according to Mr Burnett.
Meanwhile Ben Gutteridge, fund analyst at Brewin Dolphin investment management, recommends the fund to investors, if the modest improvement in manufacturing and employment data in Europe continues. This is because it is heavily exposed to financials and industrials, and underweight defensives such as healthcare.
