Actively-managed European equity funds have performed better against their benchmarks than their US equivalents over three, five and ten years and will continue to do so, according to global research and consulting firm Cerulli Associates.
In the latest issue of The Cerulli Edge - European Monthly Product Trends Edition, the group found European active equity funds have fared considerably better than their counterparts investing in US equities.
Despite a strained market, caused by a combination of Brexit, stretched valuations and weak earnings, European funds with strong conviction and performance could reverse recent outflows, the research firm said.
A study by S&P Global revealed 90% of active US equity funds tracking the S&P 500 underperformed the country's primary stockmarket benchmark over three, five and ten years to 30 June.
Meanwhile, some 64% of European active equity funds underperformed the S&P Europe 350 over three years.
However, Cerulli said this means European equity funds are more likely to beat their benchmarks that US equity vehicles.
Barbara Wall, Europe MD at Cerulli, said: "To put it in a more positive way, over 36% of active funds matched or beat the index. Whether it is the result of the more disparate nature of the European markets or other factors, Europe clearly has more active funds outperforming than the United States."
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Wall highlights investment firms such as Allianz Global Investors that have outperformed over one, three, five and ten years, saying the sector views taken within the group's fund range have paid off.
"Some funds can achieve outperformance just by underweighting one major sector," she added.
"Amundi's Europe Conservative fund has underweighted [the financials] sector, which makes up just 4.45% of the portfolio. In the three years to September 2016, the fund gained 29.5%, compared with 18.4% for the MSCI Europe, in which financials are 19.5%."
Cerulli Associates also found asset allocation and asset allocation alternative funds experienced combined net inflows of €5.6bn in September, bringing year-to-date net inflows to €45bn.
However, the firm said it is unlikely that full-year flows will reach the 2015 total of €109.4bn.
Funds of funds drew net inflows of €4bn in September, with €3.3bn going into unfettered products. Year-to-date inflows reached €19.9bn.
