Euro 2024: Funds which are favoured, forgotten and ready to shine

Having seen the curtain come down on the domestic season a couple of weeks ago, football fans will be relieved that Euro 2024 starts this Friday. The next month will see 24 of Europe’s finest battle it out over 51 matches to win the Henri Delaunay Trophy.

While the festival of football starts with hosts Germany facing Scotland in Munich, it is actually England who are favourites to win the tournament and end almost 60 years of trophy-less pain. However, there will be plenty of other countries who believe they are capable of taking home the crown.

Although we don’t have a crystal ball to predict the winners – we can guarantee there will be plenty of goals, action and surprises along the way. With this in mind, we thought we’d take a light-hearted look at some of the funds and managers who fit some of the themes heading into the event.

Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice, so if you are unsure of anything please contact an expert adviser.

The favourites - Is it England’s time?

I’m sure we’ve heard it all before when it comes to England finally ending a trophy drought that goes back to 1966, but Gareth Southgate’s team have been knocking at the door in the past three major tournaments, including reaching the final of Euro 2020.

It is a similar story for UK equities; they’ve been unloved for almost a decade, with investors hoping for a catalyst to end the pain. Despite this, there are plenty of great managers producing excellent long-term returns in the home market.

Artemis Income – This fund has been a stalwart of the UK equity income sector for more than 15 years. Managers Adrian Frost, Nick Shenton and Andy Marsh focus their analysis on a company’s cash flows and how this will drive future dividends. The stocks they will buy will have a strong franchise and offer a unique product or service. With a large-cap in focus, this is an ideal all-weather fund which has consistently done its job over a long period.

Liontrust Special Situations – This is another excellent performer that invests across UK companies of all sizes, but with a greater focus on small and medium-sized businesses. This fund has a very clearly-defined investment process, based on intangible strengths. Every stock in the portfolio must have intellectual property, a strong distribution network or recurring revenues.

The rock-solid option – France

The previous world cup winners have what many consider to be the best player in the world in Kylian Mbappe, alongside a host of other world-class footballers in every position. Anything short of victory would be considered a failure for this team. A good long-term consideration here would be a global equity income fund, because they can offer a mix of both dividend returns (income) and capital growth from markets.

Fidelity Global Dividend - This is a solid core global income fund, which aims to pay a regular and growing dividend, whilst preserving capital. Manager Dan Roberts invests in predictable, resilient businesses, which can continue to generate strong cash flows, even when times get tough. Dan mainly invests in larger companies, with the fund historically performing well in falling markets.

M&G Global Dividend - Manager Stuart Rhodes’ main aim is to grow distributions over the long term, whilst maximising total return by investing across a wide range of geographies, sectors and market capitalisations. The portfolio is high conviction with around 50 holdings.

The hosts – Germany

The old-saying goes that you never write off the Germans, particularly when there is a penalty shoot-out. The Germans have won the Euros on three occasions, most notably (and painfully) in 1996 in England. If only Gazza was a bit taller things might have been so different…

Despite struggling in recent international tournaments, the German team have found some form to enter Euro 2024 as one of the favourites. It is a similar story for European equities, which have also started to produce strong returns in 2024.

CT European Select - Manager Ben Moore focuses on buying companies with a competitive advantage, high-quality defensible earnings and consistent growth rates. The fund focuses on secular trends, examples of which include Novo Nordisk rolling out GLP-1 weight loss drugs or software company SAP’s migration to the cloud

BlackRock Continental European Income - The fund is supported by the highly regarded BlackRock European team. All members of the team, including fund managers, undertake fundamental research. Bottom-up research is key to the fund’s performance. The fund has a preference for quality sustainable dividends with the potential for growth and inflation protection. The final portfolio has around 50 stocks.

The group of death – Group B: Spain, Croatia, Italy and Albania

Every tournament has the group of death, where a series of heavyweights are pooled together. This time it is reigning champions Italy, who are joined by three-time winners Spain and 2018 World Cup finalists Croatia. Spare a thought for minnows Albania who sit in a group where it is incredibly hard to pick a winner.

The same is true for investors scouring the Investment Association Global Equities sector – which has hundreds of funds to choose from. In addition, many of the funds which sit in the sector can invest in completely different types of companies. Here are a couple to consider:

T. Rowe Price Global Focused Growth Equity – David Eiswert combines his macroeconomic view with his analysts’ best ideas to build a portfolio of 60-80 growth stocks. He targets businesses with accelerating returns on capital over the next 12 to 24 months.

Montanaro Better World – This is a global equities fund looking for medium and small-sized businesses whose products or services are making a positive impact on the world. The final portfolio holds around 50 high-quality, growing businesses.

The dark horses – Denmark and Hungary

There is always a team no-one expects a huge amount from, but who ultimately surprise a few people. The Danes proved this when they came from nowhere to win this tournament in 1992, while Hungary are one of only six teams to go unbeaten in qualifying.

For this we’d look at small-caps and Targeted Absolute Return funds. Small-caps have struggled in a rising rate environment, while absolute return funds have often been overlooked in recent years due to the stigma attached to the sector.

IFSL Marlborough UK Micro-Cap Growth - This fund typically holds around 200-250 companies to reduce stock-specific risk. Relatively small positions are taken initially, and the managers will then run their winners aggressively, adding to them as their story unfolds

Janus Henderson Absolute Return - This is a long/short equity fund with a UK bias, that aims to deliver a positive absolute return over rolling 12-month periods. Two thirds of the portfolio tends to be in shorter-term tactical ideas, where the managers believe an earnings surprise could be imminent. The remainder will be in core holdings, where the managers think there are long-term drivers in place that will either increase or decrease the share price over time. The fund has produced a positive return for investors in eight of the past 10 calendar years, with nominal losses of 0.72% and 2.7% in 2022 and 2018 respectively*.

*Source: FE Analytics, total returns in sterling, discrete calendar performance, from 2014 to 2024

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.