Focus on southern Europe – Spain or Italy best of the worst

Spain has shown it can beat returns from Germany over the very long term, although more recently it is Italy that has taken a leading role, relatively speaking.

From a universe of roughly 1,200 funds classified as FE GI Equity Europe Single Country in the FE database, there are precious few dedicated to southern European markets that have made gains over the past decade, let alone the past year or three years.

One of the immediate trends that stands out is that while Italy relatively speaking has done better than Portugal, Greece or Spain over the ubiquitous three year period, the same cannot be said for a longer 10-year period.

In fact, it is Spain that has produced a better outcome for investors over 10 years. This fact may be lost in the short term, amid short-selling bans from Madrid, and markets seeing Spain recently as the crucial ‘domino’ in need of steadying to avoid further financial contagion sweeping away monetary union, or even the Eurozone itself.

What has remained constant, over both the nearer and longer term, is volatility.

Annualised volatility of the best performing funds over three and 10 years has remained similar, at around 20% to 22%.

Investors gaining exposure to the best performance from southern Europe have put up with a fairly similar level of volatility – regardless of product or country focus.

‘Performance’ is, in this context, a very relative term, and only very loosely affiliated with positive returns for investors.

The best performing fund over a decade only gave investors around 44%.

That might sound good against other funds, or even versus some benchmark indices.

However, factor in inflation, and the real return, even if still positive, looks poorer still, against the volatility experienced.

Looking forward to the near- or long-term, the data suggests any investor who absolutely must have exposure to southern Europe is better considering funds with a mandate for Spain or Italy, not Portugal or Greece.

FundPeriod – 1yr
Columbia Spain 95 FI in EU-5.90
AXA World Funds Framlington Italy A Cap EUR in EU-11.02
FF Italy A EUR TR in EU-11.38
HEL Fidelity Italy in EU-12.06
Generali Equity Italy AY TR in EU-14.72
Willer Equity Italy P in EU-15.42
Banca Fideuram Equity Italy in EU-15.76
Banca Fideuram FondItalia Equity Italy in EU-15.88
Interfund Equity Italy in EU-16.08
Fideuram Imi-Italy in EU-16.94
AXA World Funds Framlington Italy A Cap EUR in EU2.76
FF Italy A EUR TR in EU-2.90
HEL Fidelity Italy in EU-7.03
Banca Fideuram Equity Italy in EU-9.97
Fideuram Imi-Italy in EU-10.31
Interfund Equity Italy in EU-11.82
Banca Fideuram FondItalia Equity Italy in EU-11.97
Willer Equity Italy P in EU-14.65
MSDW Italy MSCI Opals TR in EU-17.50
Amundi ETF MSCI Italy EUR in EU-17.85
MSDW Spain MSCI Opals TR in EU44.14
iShares MSCI Spain Index TR in EU43.24
FF Italy A EUR TR in EU28.56
Mediolanum Challenge Spain Equity L in EU22.35
Mora Spain Equity A in EU12.43
HEL Fidelity Italy in EU9.86
AXA World Funds Framlington Italy A Cap EUR in EU4.78
MSDW Portugal MSCI Opals TR in EU-2.45
Willer Equity Italy P in EU-5.47
Banca Fideuram Equity Italy in EU-8.73


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