European value funds surge ahead of growth competitors

European equity funds focusing on value stocks have posted almost double the returns of their growth-oriented rivals this year, as cyclical companies and the European periphery outperform quality growth plays.

The performance divergence is a reversal of the pattern seen in recent years, and some wealth managers are concerned investors may be caught out by the new trends. Over the year to 11 October, funds with a growth tilt that were previously first quartile have dropped to the bottom of the IMA Europe ex-UK sector, with returns of just over 20%. That compares with returns of almost 40% for their value-oriented peers. Two deep value funds – Invesco Perpetual European Equity Income and Cazenove European Income – are now first and second in the sector over the year to 11 October, having retu...