Experts have picked out a number of funds that could be set to benefit from the massive money printing announced by the European Central Bank (ECB) last week.
Fund ratings agency FundCalibre said there is uncertainty whether the impact of the ECB’s €1.1bn stimulus package on European markets will match that of the Federal Reserve in the US, but tipped certain funds as best placed to benefit from the quantitative easing (QE).
“While our Elite-rated managers have not positioned their portfolios simply to ride the QE wave, there are definitely areas of the market that can receive a substantial boost from the stimulus,” said FundCalibre managing director Darius McDermott.
“Nevertheless, the prospects for Europe are clearly looking more favourable, with lower relative valuations and a cheaper euro providing strong tailwinds,” he added.
Mr McDermott highlighted five of his firm’s top-rated ‘Elite’ funds as maximising the QE opportunity.
Baring Europe Select fund manager Nick Williams said QE might benefit small and mid-cap companies across the continent.
He said: “We are not yet convinced that QE will deliver a general boost to domestic economic activity in Europe, given the lack of substantive stimulatory action by Europe’s governments.
“Nevertheless, the fund could enjoy a short-term boost and the number of opportunities from should rise following QE.”
Threadneedle’s David Dudding, who runs the European Select fund, said exporters, capable of exploiting pricing power, would fare well.
He particularly picked those companies “operating in higher growth emerging markets and the US, where the fall in the euro will benefit margins, profits and returns”.
Meanwhile, Jupiter’s Cédric de Fonclare, manager of the European Special Situations fund, cited the easing of austerity measures, a weaker euro and fixed asset investment demand being on the rise as tailwinds for European equities.
Beyond pure equities, Mr McDermott named Eoin Walsh’s PFS TwentyFour Dynamic Bond and Marcus Brookes’ Schroder Multi-Manager Diversity Tactical fund as favourable holdings supported by the latest round of QE.
