Speaking in the days before last week’s announcement of a 110bn euro or £94bn rescue package for Greece, Ashcourt Rowan head of research Tim Cockerill said events had not affected his outlook for the region.
“I cannot say that in the rebalancing process I took a particular stance based on what was happening in Greece,” he said. “Because the rebalancing only comes around every six months, I tend to take that longer-term view on where we have been in the last six months and where we think we are going. But broadly, I felt the outlook has become more positive – the recovery is clearly under way.”
Panellists displayed renewed appetite for the region during last November’s AFI rebalancing, boosting their exposure to European equities in the aggressive index by two percentage points, and in the balanced and cautious indices by one percentage point. Cockerill said Ashcourt Rowan tends to overweight continental Europe in its portfolios and he remains upbeat on the long-term investment case.
His view stems partly from analysis of historical data, which shows that Europe often outperforms other western stockmarket regions. “Europe tends to do better than I feel the general perception of Europe suggests,” said Cockerill. “I think that UK investors have got a bit of a downer on Europe in the sense that we do not feel they can manage economies – and maybe this is true – and businesses as well as we can here.
“We tend to see Europe as one market whereas very clearly it is not. It is a much bigger marketplace, it has got a lot of global businesses and you have got a lot of small companies which are off the radar screen for a lot of investors but which give opportunities for those who want to go and find them. So the evidence as far as I am concerned is that Europe tends to surprise on the upside.”
In a statement released on April 29, Adrian Lowcock, a senior investment adviser at Bestinvest and an AFI panellist, urged investors to maintain their European exposure. “Whilst the concerns over Greece are mounting, investors should not move away from Europe,” he wrote. “Germany is by far the largest exporter in the European Union. A weaker euro will help its competitiveness with other exporters such as China or Japan and a recovering US economy will also support the economy.”
But despite their upbeat long-term views on the region, Cockerill and Lowcock prefer funds offering defensive exposure to continental Europe. Both men recommend Cazenove European while Cockerill also favours Schroder European alpha plus.