Europe’s equity markets have been through the wringer in the 2020s – from the Covid crash and the European Central Bank’s aggressive tightening cycle to the energy crisis unleashed by Russia’s invasion of Ukraine.
To identify funds that have outperformed despite the rapidly shifting landscape, Trustnet looked for the most volatile across the IA Europe Excluding UK and IA Europe Smaller Companies sectors that delivered first-quartile returns and first-quartile Sharpe ratios between 2020 and the end of July 2026. In other words, the funds that took more risk than their peers but were compensated for doing so.
For this ongoing series, we are using the average Bank of England base rate over the assessed period – 2.76% – as the risk-free rate when calculating Sharpe ratios across all sectors. This is to reflect the opportunity cost facing the typical UK-based investor.
Regardless of where a fund invests, the question being asked is the same: did it generate a sufficient return?
IA Europe Excluding UK
IA Europe Excluding UK funds were assessed against their most common benchmark: MSCI Europe ex UK. The index logged a Sharpe ratio of 0.52, while gaining 86.3%.
All five strategies in the table below beat the index for both returns and Sharpe ratio.
Source: FE Analytics
The stand-out performer in terms of risk-adjusted returns is Artemis SmartGARP European Equity, which logged the highest Sharpe ratio in the table at 0.77. The fund also gained 174.7% over the assessed period with a volatility of 18.1%.
Managed by FE fundinfo Alpha Manager Philip Wolstencroft, the strategy applies the firm’s proprietary SmartGARP quantitative process used across the range – a screening tool that identifies undervalued companies with improving fundamentals based on financial and macroeconomic metrics.
It was one of the most bought funds in 2025, attracting £932m in net new money while performance added a further £353m. This has continued into 2026, as Artemis SmartGARP European Equity attracted a further £243.6m in net new money over the first six months of the year.
The fund has logged first-quartile returns in the IA Europe Excluding UK over one, three, five and 10 years to the end of July 2026, gaining 257% over the decade.
The strongest overall return between 2020 and the end of July 2026 was logged by WS Ardtur Continental European, which gained 194.6% – the highest in the sector. It is the most volatile fund in the table at 20% but also has the second-highest Sharpe ratio at 0.76.
The £475.3m strategy, managed by Oliver Kelton since 2015, has an FE fundinfo Crown Rating of five.
Its largest sector allocations include consumer staples, energy and materials, with familiar large-cap names such as energy giant Total featuring in the top holdings.
While most of the fund is invested in European equities, the mandate also allows for exposure to government bonds, other fixed interest securities and overseas stocks.
Performance of the fund vs sector from 2020 to 31 July 2026
Source: FE Analytics
Another strategy that met the criteria was HSBC GIF Euroland Value. It returned 113.7% with a volatility of 17.6% and a Sharpe ratio of 0.54.
The €840.5m fund is managed by Samir Essafri, supported by Jeanne Follet, and has a higher ongoing charges figure (OCF) of 1.10%.
It aims to provide long‑term capital growth and income while also promoting environmental, social and governance (ESG) characteristics. As such, the fund qualifies under Article 8 of Europe’s Sustainable Finance Disclosure Regulation (SFDR) and aims to maintain a higher ESG score than its reference benchmark.
The portfolio currently has more than 30% allocated to financials, followed by 18.3% in industrials and 10.2% in utilities, with Allianz the top holding at 4.7%. France (30.2%), Germany (16.5%) and Spain (12%) are the largest geographic exposures.
Also appearing in the table are passive strategies UBS MSCI EMU Value Factor and Amundi MSCI EMU Value Factor, which delivered returns of 120.1% and 117.1% respectively. Their Sharpe ratios of 0.58 and 0.57 placed both funds slightly above the MSCI Europe ex UK benchmark.
The highest Sharpe ratio in the sector over the assessed period was logged by Liontrust European Dynamic with a score of 0.81 – however, the fund proved less volatile, sitting in the third quartile at just shy of 16%.
IA European Smaller Companies
The most common benchmark in the sector is the MSCI Europe Small Cap. Over the assessed period, the index gained 52.5%, with a volatility of 17.5% and a Sharpe ratio of 0.22.
Only two of the most volatile funds in the sector logged top-quartile returns and Sharpe ratios in the 2020s so far.
Source: FE Analytics
Invesco European Smaller Companies (UK) returned 93.1% with a volatility of 19.2% and a Sharpe ratio of 0.40.
The £208.4m fund is co-managed by Alpha Manager James Matthews and Michael Oliveros, targeting capital growth by investing primarily in smaller European companies with fair valuations that stand up against the management team’s fundamental analysis. Required criteria include robust financial positions, sound management teams and clear potential to deliver higher returns on capital.
Idea generation comes from proprietary quantitative screens, collaboration across the Invesco investment platform and external research such as company meetings and sell-side analysis.
RSMR analysts said: “The fund managers have built a credible track record of adding value through bottom-up stock selection as well as managing risk at fund level.
“The investment process is clear and repeatable, and the fund benefits from being part of the well-resourced Invesco investment platform.”
Performance of the fund vs sector from 2020 to 31 July 2026
Source: FE Analytics
The second strategy in the table is SSGA - State Street SPDR MSCI Europe Small Cap Value Weighted UCITS ETF, which gained 83.2% with a volatility of 19.3% and a Sharpe ratio of 0.36. The €775.2m fund tracks the MSCI Europe Small Cap Value Weighted index.
This article is part of an ongoing series. We previously covered UK equity funds here.