Fund Spotlight: why this fund has consistently delivered

European markets have been on an impressive run throughout 2025, returning 19% so far in sterling terms. A combination of factors supported equities in the region. First, while the euphoria around the US market has to some extent cooled, global investors sought opportunities further afield, improving sentiment in the region.

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In March, Germany, the largest economy in the eurozone, announced a major shift in its fiscal plans, committing toloosen strict debt rules by launching a spending package consisting of a €500 billion (£433 billion) infrastructure and defence fund. The fiscal U-turn and increase in growth projections have been welcomed by the market.

Simultaneously, the European Central Bank (ECB) has been ahead of other major central banks in cutting rates, which are currently at 2%, adding further support to eurozone economies.

While the valuation gap has narrowed, European markets trade at around a 35% discount to the US market, leaving potential for further upside. 

The JPM Europe Dynamic (ex-UK) fund is a highly rated option in this space and a recent addition to ii’s Super 60 list of investment ideas.

The strategy has been led by Jon Ingram since 2007, who is supported by co-managers Blake Crawford and Alex Whyte, as well the wider international equity group at JPMorgan.

The fund has a clear objective of achieving capital growth over the long term (five to 10 years).

What does the fund invest in?

The management team has an unconstrained mandate, with the ability to invest in their best ideas, meaning companies of all sizes, and shift the allocation when opportunities arise.

The team-based process is designed to capture the benefits of three investment styles: value (buying companies that look inexpensive); quality (backing financially strong businesses); and momentum (investing in companies whose performance is improving).

The team’s approach combines quantitative research (data-driven screening) and fundamental analysis (deeper research, often involving company meetings and site visits) to target relatively undervalued, high-quality stocks with an improving business outlook.

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The team ultimately combines 60 to 100 holdings (currently 75) to build a core portfolio, with new positions typically initiated on companies displaying positive earnings momentum or news flow. While sufficiently diversified, the portfolio’s meaningful exposure to the momentum factor leads to high turnover (over 100% per year) and requires a hands-on, active management style.

Large-cap stocks account for 55% of the portfolio, with mid–caps and small-caps making up the remainder, which represents a bias lower down the market cap spectrum compared to its Morningstar Category peers.

At a country level, the largest allocation is to Germany (25%), with France (17%) and Switzerland (13%) also accounting for a large share of the portfolio.

At the sector level, the fund’s largest overweight position is to healthcare (+6% versus the benchmark) and its largest underweight is to financial services (-4% versus the benchmark).

Recent additions to the portfolio include two industrial names: Siemens AG (XETRA:SIE), the German engineering company, and Safran SA (EURONEXT:SAF), the French aerospace and defence company that makes engines, equipment, and technology used in airplanes and helicopters. Both feature among the portfolio’s top 10 positions.​​​​​​​

How has the fund performed?

This fund has been a reliable performer in the European equity space. Over 10 years, the fund has returned investors an annualised 10.7%, outpacing the returns of its benchmark (FTSE All World Developed Europe ex UK) at 9.8% and Morningstar (Europe ex-UK Equity) category at 9.0%.

These figures highlight resilience across market cycles, including outperformance in volatile years such as 2022 when the fund declined -5.9%, which was less than the -8.7% fall of the benchmark and -8.2% decline of Morningstar peers.

​​​​​​​The fund will perform best in stable markets driven by stocks displaying sound fundamentals. In times of market euphoria, where unproven companies trade on high valuations in anticipation of strong growth, the fund likely has the possibility of underperforming given its focus on stocks with value and quality characteristics.

More recent performance has also been impressive. Over the past year, the fund is up 21.4% with stock selection a key positive. Spanish multinational bank Banco Santander SA (LSE:BNC) is an example of an overweight position that paid off, as the lender posted record profits amid higher interest rates, with the stock nearly doubling over the year.

Source: Morningstar Total Returns (GBP) to 30/09/2025. Past performance is not a guide to future performance.

Why do we recommend this fund?

The strengths of this fund lie in the experienced management team and the well-resourced international equity group at JP Morgan. The portfolio is well constructed and offers investors access to a core portfolio of European equities with the potential to outperform the benchmark in most market cycles through its dynamic exposure to value, quality, and momentum stocks.

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Additionally, the fund’s active approach allows it to tactically adjust country and sector allocations, providing flexibility to capture opportunities across the eurozone’s evolving economy.

Overall, this combination of experienced management, active stock selection, geographic and sector flexibility, and disciplined risk management makes the JP Morgan Europe Dynamic (ex-UK) fund a compelling option for investors seeking diversified exposure to European equities with the potential for superior long-term returns.

This fund is available for a yearly fee of 0.84% and is one of ii’s Super 60 investment ideas.

Please find the latest factsheet here.