According to the report, Eurozone economic worries were also reflected in the first quarter of 2013 performance: European focused funds returned 5.6% versus eurozone focused funds’ 2.4% gain.
The doubt over Italy’s leadership stalked the markets over the course of March, as elections in February failed to decide on a government, the report argued.
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The report added that investors were shaken by the news that a levy will be applied to Cypriot bank depositors as part of the bailout agreement offered by the country’s eurozone partners and the International Monetary Fund.
The ratings agency also says European fund managers had to contend with a trend reversal in underlying style and sector performance drivers.
"Growth stocks returned to form in Q1 13, outperforming the wider index and value stocks. Financials (20% of MSCI Europe Index) also suffered," the report added.
"The key question for growth biased managers remains, as to until what valuation levels is one willing to pay for growth stocks in a low growth environment."
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