Fund managers’ positive outlook for European equities

European unionEuropean equities have attracted greater interest from asset managers in recent weeks with at least two firms overweighting the region. BlackRock and Pictet Asset Management increased their weighting towards European stocks earlier this year and the chief economist at BMO Global Asset Management, Steven Bell, said in January that European equities could "finally" outperform in 2017. Vincent McEntegart, a Kames Capital fund manager, has this morning become the latest to voice some positive views for the region’s equity markets. “The European economy is recovering, with the Eurozone’s economic surprise peaking last month at levels not seen since early 2013,” he said. But McEntegart, who manages the Kames Diversified Monthly Income Fund, warned also that bond yields needed to keep drifting higher and companies must keep delivering on earnings if the “bond-yield inspired rotation that we have seen towards more value-oriented and cyclical sectors” is to be sustained. Earlier this month, Richard Turnill, BlackRock’s global chief investment strategist, said BlackRock had upgraded European equities to overweight. At the time (February 7) the US dollar index had dropped to a more than two-month low, while Eurozone data pointed to “improving growth”, he said, and noted that European earnings season was about to start. Also in early February, Martin Todd, European equities manager at Hermes Investment Management, warned that investors could be missing out on ‘bottom-up’ opportunities if they focused too much on macro instability caused by political events in Europe. Noting that investors had pulled out up to €100 billion from active European equity funds this year, Todd said in a paper that “quantitative easing in Europe is still in its relative infancy, yet discussions are already progressing towards infrastructure spending and fiscal stimulus. Listed European companies could be well placed to benefit”. Hermes was not concerned by European outflows and “scepticism and fear” were signals of opportunity, he wrote. He urged investors to separate the outlook for European companies – which have already been tested by years of pressure – from macro-political events. “Companies are not the economy or the politics of any nation, and though European businesses may operate within these overarching forces, many have the talent, resources and opportunities to adapt, restructure and innovate in order to thrive,” he said. In January, Pictet Asset Management overweighted European equities. “Based on the combination of relatively cheap valuations and the strong potential for growth, Europe is one of the most attractive equity regions globally,” said Luca Paolini, who is chief strategist, at the time. ©2017 funds europe

Sponsored Profiles

SPONSORED FEATURE: Investing for income

May 17, 2017

Portfolio Manager Thomas Kruse examines the findings from Pioneer Investments’ survey on income investing and outlines ways of achieving a target income.

SPONSORED ARTICLE: A radical solution to KYC concerns

May 17, 2017

The 1MDB affair shows that lax know-your-customer and due-diligence procedures are a major risk, says Paolo Brignardello, head of product management and marketing, Fundsquare. New solutions are...

SPONSORED FEATURE: AIFMD - What does Brexit mean?

Apr 18, 2017

An open discussion between funds industry experts and initiated by SGG Luxembourg took place in London to examine  the implications of Brexit for UK fund managers marketing to the EU.

SPONSORED FEATURE: Luxembourg fund reporting – CRS vs FATCA

Apr 18, 2017

Luxembourg funds need clear procedures for CRS compliance, writes Andrew Knight, Partner at M Partners, a member of the Maitland network of law firms.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.



May 17, 2017

With such an intangible product, it can be hard for asset managers to communicate what they do. Having personality and connecting with customer aspirations may be the key, our branding roundtable hears.

ROUNDTABLE: The issue is perception

Mar 21, 2017

Our panel discuss tax transparency, the elegance of private placement and why Jersey could do more to promote itself. Chaired by Tom Cowsill in Saint Helier.