Road to joy? Best and the worst of the Europe ex-UK sector


Since the Brexit vote in June last year, the UK and European economies have seen a switch in fortune. UK GDP growth in the year to date languishes at the bottom of the G7 and is joint worst, alongside Finland, for the EU.

Meanwhile, the eurozone is grew at double the rate of the UK in Q2.

Political upsets failed to materialise in Austria, the Netherlands, and most significantly France, where Marine Le Pen, who campaigned for a referendum on euro membership, was defeated by Emmanuel Macron.

Instead it was the snap UK election that delivered the most uncertain outlook with Theresa May’s hope for a Conservative landslide instead resulting in a hung parliament.

One year after the UK’s vote to leave the European Union, the IA European Smaller Companies and the Europe ex-UK sectors had delivered 34.7 per cent and 34.2 per cent respectively over the period. In contrast, the UK Smaller Companies and UK All Companies sectors delivered 26.3 per cent and 19.4 per cent respectively.

Sentiment towards eurozone equities has shifted in response with a Lloyds investor survey showing net sentiment at -12.6 per cent in July 2017 compared to -48.3 per cent a year earlier.

Funds in the IA sector must invest at least 80 per cent of their assets in European equities and can add no more than 5 per cent to UK equities.