Dubai: This week's focus is on European equities. The big issue facing European analysts is: what is Europe?

Is our benchmark geographical Western Europe, if so, where does West and East meet these days?

For our records, we have plumped for European ex-UK (i.e. funds that do not include the UK as we have the UK information separated out for Gulf News readers).

When scrolling through euro funds it is fairly important to assess what the fund manager considers to be European and what's not. For example, some of the Swedish-based funds described as "European" contain a distinctive Scandinavian aura (as the fund managers stick to what they know); yet because of the range of countries, there is enough justification to say they are not country-specific.

In short, from the aspect of selecting benchmarks, and the aspect of selecting funds, the intermediate and the professional investor really needs to be sure which Europe they are looking at.

Top-down

From the top-down perspective, the "European" results look like a microcosm of what is happening globally as you can see from comparing the Russian and European indices below, and where "Europe" is largely Western Europe rather than Team East and West.

So similar to the "de-coupling" of the Emerging Markets from the mature global markets; the higher risk (greater volatility) of Russian markets has outperformed and de-coupled from the Western European markets.

Note though, and unlike the Emerging Market indices, Russian indices reflect much greater volatility and their five year results owe a lot to the last 52 weeks; whereas the Emerging Market indices have a more consistent five-year record (that's India and China for you). Back to Western Europe where it's not easy to find a "typical" European Fund; but that's not going to stop us. This week, we centre on a Blackrock Fund, found under the name: BGF Continental Europe (see box above). The fund stands second in our five year standings with a 73 per cent performance against European benchmarks more than 50 per cent below.

 

- Sean Kelleher is chairman of Mondial Financial Partners.