Investors favour Europe stocks despite lower stimulus

Europe map starsEurope is still in favour with investors globally despite the European Central Bank (ECB) delivering levels of stimulus below market expectations. Bank of America Merrill Lynch’s fund manager survey has found a majority of investors favour Europe the most as an investment destination, with the region viewed as cheapest among developed markets. Both stock and macro sentiment remains bullish, the survey finds, despite lower-than-expected stimulus. Overall, 55% of global fund managers are overweight to Europe as of December 10 2015. European growth and inflation forecasts among investors marginally improved, with nine in 10 believing another region-wide recession unlikely. From a country-specific perspective, Germany remains highly favoured, with 28% willing to overweight the index. There was a significant improvement in sentiment towards Italy, with 33% overall saying they would overweight Italian equities over the next 12 months, up from 7% last month. Switzerland and the UK saw sizeable declines in investor sentiment, with 44% saying they would underweight Swiss stocks, and 31% underweighting UK equities. In terms of sector weightings, healthcare and tech saw gains, while media, banks and industrials experienced the largest declines. Perhaps unsurprisingly, fund managers are also underweight commodities, although managers see the sector as undervalued as a result of its long period spent out of favour. Overall, within European equity markets the level of risk aversion remains high: a net 22% of European fund managers believe low beta stocks will outperform high beta stocks over the next year, and a net 42% think high quality equities will outperform low quality stocks over the same period. Caution was also evident from cash levels, which were unchanged at the above-average level of 4.5%. The survey gauged the opinions of 215 asset management professionals, who collectively hold $620 billion (€566 billion) in assets under management. ©2015 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.