Investors 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