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Who is the Best European Equity Fund Manager?

The nominations are in for the ninth annual Morningstar Pan-European Fund Manager of the Year Awards and analysts have picked a deserving group of finalists

Muna Abu-Habsa 9 February, 2018 | 11:57AM

Over the last few months Morningstar analysts have pulled together to identify fund managers who they believe are among the very best at what they do. Although nominated managers should have had a strong 2017, that is far from sufficient qualification unto itself.

To be nominated for an award, a manager should be running an active fund that is among the approximately 900 vehicles that receive a Morningstar Analyst Rating in Europe but, to hold nominees to the highest standards, that fund should also be a Medallist – meaning the analysts have recognised it with a Gold, Silver or Bronze Morningstar Analyst Rating after applying a rigorous evaluation using our Five-Pillar Methodology framework.

We give only four of these awards in Europe each year: European Equity Fund Manager of the Year; Global Equity Fund Manager of the Year, Fixed-Income Fund Manager of the Year, and this year we have a new award for Multi-Asset and Alternatives. The winners of these awards are nominated and selected by Morningstar’s Europe-based team of manager research analysts.

The analysts put funds through a rigorous evaluation using this framework, which weighs the quality of management, the strength of the process used to run the fund, the quality of the parent organisation – including how it treats investors in its funds – performance, and costs.

European Equity Fund Manager of the Year Finalists

Manager: Michael Fraikin, Thorsten Paarmann and the Invesco Quantitative Strategies Team

Nominated for work on: Invesco Pan European Structured Equity

The team behind this fund is exceptionally strong and they were Morningstar’s European Equity Managers of the Year in 2015. Lead managers Michael Fraikin and Thorsten Paarman are part of a group, Invesco Quantitative Strategies, which features more than 40 experienced professionals who continuously develop and refine the quantitative methodologies at the heart of this fund’s stock-selection approach.

The team’s breadth and quality of experience is key to our confidence. With their diligent approach in place since September 2006, the team has built an outstanding long-term record.

Indeed, the returns of Invesco Pan European Structured Equity are among the best in the Morningstar Europe Large-Cap Blend Equity Category, while remaining one of the least-volatile offerings. The fund has displayed superior resilience in difficult market environments but this is not its only strength, as evidenced by its showing in 2017 when it delivered top-quintile returns, bolstered notably by good stock selection across most selection criteria. Quantitative strategies are susceptible to strong trend reversals, but the consistency of returns across different market cycles is testament to the quality of the team’s work here.

Manager: Alice Gaskell and Andreas Zoellinger

Nominated for work on: BGF Euro-Markets, BGF European Equity Income and BlackRock Continental Euro Income

Alice Gaskell and Andreas Zoellinger are a duo of exceptional quality. The managers have extensive experience in managing European equity mandates, with Gaskell running BGF Euro-Markets since 2003, accompanied by Zoellinger as co-manager since 2007. The duo is part of a broader European equity team under the leadership of Nigel Bolton, whom we hold in high regard. It is a cohesive group of people, working closely together. The strategy applied is style-agnostic, which gives the managers flexibility to invest where they see value.

Gaskell and Zoellinger look for companies with quality management, strong competitive positioning, financial discipline, and with catalysts for short-term revaluation by the market. By assembling a concentrated but diversified portfolio they aim to generate the majority of return from stocks rather than sector or country calls.

Such latitude only works in the hands of highly capable managers, and Gaskell and Zoellinger have demonstrated their superior skills in various market environments for over a decade. The quality of execution is exemplary which is displayed by their consistent track record for BGF Euro-Markets, but also for the equity income funds they have run since 2011.

Manager: Fabio Riccelli

Nominated for work on: Fidelity Funds – European Dynamic Growth

Fabio Riccelli climbed up Fidelity’s analysts ranks in London in the early 2000s and assumed his first stint in portfolio management in 2004. He developed his portfolio management skills with the guidance of veteran Fidelity manager Colin Stone, running a sleeve of the European Smaller Companies fund, though he became a capable manager in his own right and has been single-handedly running the Silver-rated Fidelity European Dynamic Growth fund since 2008.

His disciplined stock selection process plays to the team’s strength in fundamental analysis, as he is well-supported by Fidelity's sizable research team and strong group of European equity managers, which was key to the fund’s success. Riccelli selects stocks individually, targeting firms with high and durable growth rates. His patient, long-term mindset leads to a low turnover, relatively compact and highly distinctive portfolio.

This approach has handsomely rewarded the fund’s shareholders: over his tenure at the helm of the strategy, the manager outpaced his competition by a wide margin, delivering an impressive annualised return of 14.9% through the end of 2017.

Watch Morningstar fund analyst Muna Abu-Habsa explain why these three funds deserve their nominations on YouTube here.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article
Security NamePriceChange (%)Morningstar
Rating
BGF Euro-Markets D2RF32.73 EUR0.46
BGF European Equity Income D2 EUR19.82 EUR0.53
BlackRock Continental Euro Inc D Acc206.61 GBP0.69
Fidelity European Dynamic Gr Y-Acc-EUR19.73 EUR1.22
Invesco Pan European StructEq A EUR Acc18.81 EUR0.46
About Author

Muna Abu-Habsa  is a senior investment research analyst at Morningstar