Volatility hits small-cap focused European funds

Standard & Poor's research shows many star funds underperformed in 2007 as they struggled to sell out of small- and mid-cap holdings

Volatile European markets in 2007 led to many star funds underperforming for the first time in five years and large redemptions, according to Standard & Poor's. Associate director of research Deborah Boys said funds that had enjoyed an extended period of outperformance suffered a terrible time in 2007 and many shrunk by up to a third. Schroder ISF Dynamic Growth fund, run by Andy Brough and Andrew Lynch, saw assets under management reduce by 75% for example. Meanwhile, Richard Pease's New Star European Growth swung from €275m in 2006 to €1.5bn over 2007 and then back down to its prese...