Structural upheaval, political challenges and weak economies have masked strong investment opportunities in Europe for clients seeking growth, manager Nick Williams has claimed.
Mr Williams, manager of the Baring Europe Select Trust and Head of Small and Mid-Cap Equities at Barings, said: “There are significant concerns around growth in Europe, and investors are right to be cautious.
“However, within the small and mid-sized sector there are many dynamic, successful and growing companies, many of them global leaders in their fields.”
He claimed negative sentiment towards the continent’s economic prospects had caused valuations to become attractive, leading to opportunities for active investors taking a long-term view.
“Recent volatility has ensured that Europe remains a ‘land of opportunity’ for stock pickers who can identify these well-priced, attractive opportunities,” Mr Williams said, adding: “When sentiment is negative, we find that the number of opportunities to invest increases.”
Mr Williams’ comments came as figures compiled by Deutsche Bank revealed that Chinese direct investment in the EU has quadrupled from €6.1bn (£4.8bn) in 2010 to nearly €27bn at the end of 2012.
The buying spree, the bank said, was a transformation of the model of Chinese outbound investment and expected it to increase steadily over the next decade.
Adviser view:
Matthew Clark, a chartered financial planner with Exeter-based Seabrook Clark, said: “In my view, Mr Williams and his team have done a good job in the European small and mid-cap space over the past few years and delivered some attractive risk-adjusted returns.
“Having said that, my preference currently is to allocate to European large-cap stocks rather than small/mid cap as they tend to give more global exposure and are less dependent on the recovery of the Eurozone and better able to insulate a sterling investor from euro depreciation.”
