The investment trusts to replace Gartmore European

Guillaume Rambourg’s departure from Gartmore has been big news in recent days and having been prompted by all the headlines, I have been looking at the performance record of the Gartmore European Trust and. For all the fuss, their performance over the past few years is not that sparkling relative to their peer group.

To give Gartmore some credit, the European investment trusts have a vastly superior track record compared to European open-ended funds. Using Winterflood’s statistics for the investment trusts (net asset value change) and Citywire’s for the open-ended – the average European investment trust would have been ranked fourth out of 113 open-ended funds over five years to the end of June 2010.

This is more remarkable, given the investment trust average has been dragged down by the woeful performance of F&C Eurotrust (where the board has seized control of the situation, sacked F&C, replaced them with Edinburgh Partners and renamed the fund European Investment Trust).

Sector star

The star of the sector at the moment is Alex Darwall with Jupiter European Opportunities, after a dramatic recovery in his performance over the past 12 months.

I like Alex’s investment style – he aims for long-term outperformance and doesn’t get fixated on short-term moves; his focus is all about stock-picking; he understands that managing risk is all about not losing money (not underperforming a benchmark); and he has a substantial personal investment in the fund.

My other favourite is Tim Stevenson, the manager of Henderson Eurotrust, whose focus on quality growth stocks has paid off over time.

The team running BlackRock Greater European, Vincent Devlin and Sam Vecht, have also had a good year. This fund is differentiated by a higher exposure to emerging Europe than most of its peers.

Charter European has just lost its manager, Mark Lovett, and it is a bit smaller than most of the peer group. So it might not attract much attention until the new manager proves himself.

All these funds have beaten Gartmore European over the past three years and, with the exception of the BlackRock fund, all are trading at wider discounts. Investors might also want to take a closer look at European Investment trust now that Edinburgh Partners have been in charge for almost six months.

I am not sure the performance numbers to date would justify a switch but it is early days.

Worst performing