Ask The Experts: European Equities An Attractive Opportunity For Stock Pickers
Philip Dicken, Head of European Equities at Threadneedle Investments, shares his outlook for European equities and why he believes investors should continue to be expose to this region despite macroeconomic concerns.
What is your outlook for European equities over the next two to three years?
- Very exciting period even if outlook for European economies remain challenged
- European equities coming off low multiples with a PE ratio of around 11X and a dividend yield of 3.7%
Given the uncertainty surrounding the Eurozone debt crisis, what are the reasons for investors to maintain exposure to European equities?
- Best thing about European equities right now is that not many investors are looking at this area
- European equities are being under-researched, creating a good environment for European investors and stock pickers to uncover alpha-generating opportunities
Within Europe, which sectors or countries present the best investment opportunities?
- Overweight growth at the moment, preferring quality growth companies that can grow even if the economic environment is very difficult
- Invests in companies that are exposed to growth, whether within Europe or internationally
- Looking out for exporters as the local Europe environment remains difficult
- Overweight industrials and health care sectors
- Underweight financials sector and âvalue trapsâ such as utilities and telcos which have very low rates of growth
On the other hand, which sectors or countries are less attractive from a risk-reward perspective?
- Underweight Spain, Portugal and Greece, countries which present very challenging GDP environments
- Only invests in companies which are located in these countries if they think there is a real growth prospect
- Basically underweight periphery and overweight core Europe
||14 September 2012
||Ask The Experts: European Equities An Attractive Opportunity For Stock Pickers