In recent years the fund's performance has been poor. When this happens we aim to find out why and assess the potential for improvement.
Barry Norris, the fund’s manager, seeks to invest in companies capable of delivering better than expected earnings growth. When we analyse the fund our research suggests his style, which is to invest in lower-yielding companies of all sizes, sector positioning, and country allocation have been fine. We might have expected the fund to lag modestly behind the stock market based on this positioning, but it is some way behind.
|Annual percentage growth|
| Feb 2013 -
| Feb 2014 -
| Feb 2015 -
| Feb 2016 -
| Feb 2017 -
|FP Argonaut European Alpha||27.1%||1.5%||3.0%||7.1%||15.4%|
|FTSE World Europe ex UK||15.4%||5.2%||-5.2%||27.3%||12.7%|
Past performance is not a guide to the future. Source: Lipper IM to 28/02/2018
This means his stock picking has detracted significantly from performance, in our view. He invests in a relatively small selection of businesses, which is a higher-risk approach, and these have not done well when compared with others of a similar size, in the same sector, or in the same country.
We tend to favour fund managers who deliver greater returns than their benchmark or peer group through good stock picking. This is because we believe it is more repeatable than trying to second guess which sector or country will perform well.
From the launch of this fund in May 2005 to the end of 2015 Barry Norris performed well and stock selection was positive. While all fund managers go through poor periods, including times when their stock picking is weak, we are disappointed with the extent to which negative stock selection has detracted from recent performance.
With an ongoing charge of 0.91%, the fund is priced at a significant premium to others we feel have better long-term prospects. It can be worth paying a higher management charge for fund managers with exceptional track records and excellent performance potential, but we do not believe this fund should command such a premium.
We regularly reassess the prospects and value for money of our favourite funds. We no longer believe this fund offers the performance potential or value that we seek for the Wealth 150. The European sector is highly competitive and features a number of exceptional fund managers with strong track records. Our favourites continue to feature on the Wealth 150+.
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