Europe - last place you want to invest?
Where is the last place you would want to invest right now? Most people would say Europe. We believe that is a mistake.
As one analyst put it “Europe does dividends better than anyone else” in the sense that Europe has the highest dividends of any country in the world, and 10%+ growth in the payout is expected in each of the next two years.
When we are looking for opportunities throughout a portfolio we seek out areas that are (unjustifiably) cheap, or where there are outstanding long term growth opportunities – ideally both.
European equities have been sold for 10 years – they are unloved and under-owned. This alone would get our attention – the prospects for profits growth in a wide range of European companies demand a closer look.
In one sense Greece is at the centre of the world for the second time in the last 3,000 years. But Greece is not Europe – even combined with Ireland and Portugal it represents just 4% of the European economy. Much of the rest of Europe is very outward looking. For example, as well as being full of world class companies, European businesses have more exposure to emerging markets than Japan and the US.
We have said elsewhere that it is right to be cautious in the short term, and that the eurozone might be the most intractable of various global problems. And yes, capital values could be very volatile before a final eurozone solution is eked out. But to a large extent European equities already reflect these short term problems – and as such represent significant long term potential.
Ignis Argonaut European Income is the market leader. The yield is 4.9%, and the manager believes he can grow this by 10% in 2011. A medium risk fund.
(Taken from TopFunds Guide January 2011)