Investing Goals: France

WORLD CUP 2018 INVESTMENT SERIES: In the third of our eight-part series, we feature our Group C favourite - France

James Gard 18 June, 2018 | 7:07AM
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This article is part of our World Cup 2018 Investment Series, one top market pick from each of the eight Groups – but instead of comparing sporting prowess we outline the best investment prospect.

Emmanuel Macron Meets the France Football Team

France are favourites to win Group C ahead of Australia, Denmark and Peru, a team that has not qualified for the World Cup for 36 years.

Like French politics, the national football team has a certain youthful swagger these days after many years of underachievement. Les Bleus are ranked fourth most likely to lift the 2018 World Cup after serial winners Brazil and recent winners Germany and Spain.

The old guard of French football has been swept away in recent years to make way for young global stars such as Paul Pogba and Antoine Griezmann. Likewise, 63-year old former President Francois Hollande made way for 39-year old former investment banker Emmanuel Macron in the Elysee Palace last year.

Macron met with the French football team recently before they headed off to World Cup and had this message for Les Bleus: "A competition is a success when it is won."

France is not only ahead of England in the bookies’ rankings – the country’s economy is also outperforming the UK: GDP growth in the first quarter of this year was 0.3%, compared with Britain’s 0.1%.

Britain's looming exit from the European Union has been seen as an own-goal across the Channel; Paris officials are trying to tempt London's global banks and their high-spending staff to relocate to the French capital in the next few years. According to accountancy firm EY, the Paris is now a more attractive destination for foreign investment than London for the first time in a decade.

France boasts a number of global companies, including oil giant Total (FP), cosmetics firm L’Oreal (OR) and banks such as BNP Paribas (BNP).

EDF Energy (EDF) supplies gas and powet to UK customers and is also building two new nuclear reactors at Hinkley Point in Somerset.

Jupiter the Standout Among European Funds

A passive option is on offer from Lyxor in its London-listed CAC 40 ETF (CACX), which has a four-star and Bronze Rating from Morningstar. Its three-year annualised return is just over 14%, according to Morningstar data.

In terms of investment trusts, France has the biggest country weighting in five-star rated JP Morgan European IT Income (JETI). More than 14% of the fund is invested in France and Total is its third-biggest holding. The trust's share price has risen by more than 9% a year over the past three years.

Among open-ended funds, Jupiter European has a Morningstar Analyst Rating of Gold and a five star performance rating. It has been managed by Alexander Darwall since 2001 and it counts French software company Dassault Systemes (DSY) among its top 10 holdings.

Its three-year annualised return is nearly 18%.

“We believe Jupiter European is a stand-out choice for European equities managed by an experienced and talented fund manager,” Morningstar analyst Sam Meakin says.

“The fund has comfortably outperformed its reference benchmark and the Europe ex-UK large-cap equity Morningstar Category average over the manager’s tenure. Risk-adjusted performance is also very strong, helped by the focus on quality businesses; this has helped to limit losses in down markets.”

Darwall also manages Jupiter European Opportunities (JEO) investment trust, which has just under 10% of its assets invested in French companies.

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.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BNP Paribas Act. Cat.A65.77 EUR0.63Rating
Electricite de France SA  
European Opportunities Trust858.00 GBX-0.69Rating
Jupiter European I Acc3,670.62 GBP0.72Rating
L'Oreal SA415.45 EUR0.23Rating
Lyxor CAC 40 (DR) ETF Dist GBP6,757.00 GBX0.34Rating
TotalEnergies SE68.29 EUR-1.16Rating

About Author

James Gard

James Gard  is senior editor for Morningstar.co.uk

 

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