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Why European equities?

For bottom-up investors, the outlook is bright

Home / Perspectives / Why European equities?

Martin Todd, Co-manager, Hermes European Alpha
02 February 2017
European Equities

wee-thumbnailInvestors have retreated from European stocks throughout 2016, with market sentiment close to its lowest level since the 2011-2012 sovereign debt crisis. Then, as now, political and macroeconomic uncertainty was the source of their anxiety. Amid continued economic torpor, a range of political pressures – including Brexit, the rise of anti-establishment movements that threaten the European construct, and social tensions caused by the migrant crisis – have spurred investors to pull up to €100bn from active European equity funds this year.

Key points

Investors have avoided or exited European equities in a year of political shocks and macroeconomic uncertainty

While the risks posed by far-right parties and instability in Eastern Europe are myriad, their impact on markets may be overblown

We believe that investors focused on top-down events may be missing out on bottom-up opportunities

Only active managers can concentrate on the European companies with the financial strength and vision to take control of their destiny

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Martin Todd Co-manager, Hermes European Alpha Martin Todd joined Hermes as a senior analyst in March 2013. Prior to this he was an investment director at Scottish Widows Investment Partnership. Martin joined SWIP as a graduate covering US equities before spending two years covering the Japanese equity market. In 2007 he joined the UK equity team and was an analyst and fund manager within a team managing more than £20bn in AUM. Between 2008 and 2012, Martin was a portfolio manager on four offshore funds and from 2010 co-managed £4.5bn in low-risk funds. In addition he was lead sector analyst on travel and leisure, media and personal goods. Martin graduated from The University of St Andrews with an MA in Economics & Modern History and is a CFA charterholder.
Read all articles by Martin Todd

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