European Equity Income - January Commentary
Nick Edwards Portfolio Manager, European Equity Income
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Will James Portfolio Manager, European Equity Income
This is a marketing communication. Please refer to the prospectus, supplement and KID/KIID for the Funds before making any final investment decisions. Past performance does not predict future returns.
In 2024, Guinness European Equity Income Fund rose +5.0% (in GBP) compared to the MSCI Europe Ex UK Net Return Index, which rose by just +1.9%. The Fund therefore outperformed the Index by 3.1% over the year. In Q4 2024, the Fund fell -4.2% (in GBP), outperforming the MSCI Europe ex UK Index by 0.1%. Following the ten-year anniversary of the Fund at the end of 2023, it is pleasing to see the Fund has outperformed the Index and IA Europe Excluding UK Sector over 1,3,5 and 10 years.
At the start of the year, Europe ex UK valuations remain at attractive levels vs history and all-time low levels relative to the US, as we wait to see if and how the threat of tariffs on European exports unfolds. We continue to find plenty of opportunities among Europe’s globally leading companies, where dividend yields are approximately double those on offer in the US, without giving up on quality. We focus on those leading franchises with proven track records for generating persistent high cash returns, supported by strong balance sheets. Companies with leading market positions and long runways for growth, are well placed to take market share in downturns, and are trading at reasonable valuations.
The Fund offers nearly twice the return of the wider European market for a similar multiple and an attractive dividend yield versus the market, driven by far lower levels of leverage.
ROE vs PE and Dividend Yield for MSCI USA (black), MSCI Europe ex UK (red) and Fund (green)
Source: Bloomberg data
In contrast to the political noise reported in the press in 2024 and some widening of France minus Germany yields, national spreads over German 10 year yield haven’t looked so unified for some time, following peripheral convergence in 2024. Trump and China are both putting pressure on Europe and the stage appears set for a degree of policy response in 2025. Far right and populist parties abound but what choice does Europe ultimately have if it wants to stand up to the US and China, other than integration and cooperation. We suspect a little bit of good news on this front could go a long way to alleviating historically low European valuations compared to the US. Mario Draghi’s report on European competitiveness has given policy makers a route map. Meanwhile, the German federal election on February 23rd could represent a positive catalyst if the CDU/CSU party, led by Frederich Merz, prevails. As ever, European politics will remain complicated. We will continue to focus on quality companies trading at fair valuations with strong long-term structural growth drivers.
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The information provided on this page is for informational purposes only. While we believe it to be reliable, it may be inaccurate or incomplete. Any opinions stated are honestly held at the time of publication, but are not guaranteed and should therefore not be relied upon. This content should not be relied upon as financial advice or a recommendation to invest in the Funds or to buy or sell individual securities, nor does it constitute an offer for sale. Full details on Ongoing Charges Figures (OCFs) for all share classes are available here.
The Guinness European Equity Income Funds are designed to provide investors with exposure to high-quality dividend-paying companies in the Europe ex UK region. The Funds aim to provide capital appreciation and a source of income that has the potential to grow over time. The Funds are actively managed and use the MSCI Europe ex UK Index as a comparator benchmark only.
Guinness European Equity Income Fund
Documentation
The documentation needed to make an investment, including the Prospectus, the Key Information Document (KID) / Key Investor Information Document (KIID) and the Application Form, is available from the website www.guinnessgi.com , or free of charge from:
- the Manager: Waystone Management Company (IE) Limited, 2nd Floor 35 Shelbourne Road, Ballsbridge, Dublin DO4 A4E0 or,
- the Promoter and Investment Manager: Guinness Asset Management Ltd, 18 Smith Square, London SW1P 3HZ.
Waystone IE is a company incorporated nder the laws of Ireland having its registered office at 35 Shelbourne Rd, Ballsbridge, Dublin, D04 A4E0 Ireland, which is authorised by the Central Bank of Ireland, has appointed Guinness Asset Management Ltd as Investment Manager to this fund, and as Manager has the right to terminate the arrangements made for the marketing of funds in accordance with the UCITS Directive.
Investor Rights
A summary of investor rights in English is available here: https://www.waystone.com/waystone-policies/
Residency
In countries where the Funds are not registered for sale or in any other circumstances where their distribution is not authorised or is unlawful, the Funds should not be distributed to resident Retail Clients. NOTE: THIS INVESTMENT IS NOT FOR SALE TO U.S. PERSONS.
Structure & Regulation
The Funds are sub-funds of Guinness Asset Management Funds PLC, an open-ended umbrella-type investment company, incorporated in Ireland and authorised and supervised by the Central Bank of Ireland, which operates under EU legislation. The Funds have been approved by the Financial Conduct Authority for sale in the UK. If you are in any doubt about the suitability of investing in these Funds, please consult your investment or other professional adviser.
WS Guinness European Equity Income Fund
Documentation
The documentation needed to make an investment, including the Prospectus, the Key Investor Information Document (KIID) and the Application Form, is available in English from https://www.waystone.com/our-funds/waystone-fund-services-uk-limited/ or free of charge from:-
Waystone Management (UK) Limited, PO Box 389, Darlington DL1 9UF.
E-Mail: investorservices@linkgroup.co.uk
Waystone Management (UK) Limited is authorised and regulated by the Financial Conduct Authority.
Residency
In countries where the Fund is not registered for sale or in any other circumstances where its distribution is not authorised or is unlawful, the Fund should not be distributed to resident Retail Clients.
Structure & regulation
The Fund is a sub-fund of WS Guinness Investment Funds, an investment company with variable capital incorporated with limited liability and registered by the Financial Conduct Authority.