AB (formerly known as AllianceBernstein) said Europe’s “fundamental picture” has improved and the region is once again offering investors “exciting opportunities in equities”.
“Many investors are understandably paying attention to the US economic recovery as an important opportunity, but we think they should also remain alert to the potential for capturing attractive risk-adjusted returns elsewhere,” AB head of equities and chief investment officer Sharon Fay said.
“Europe is a region which, in our view, investors should be carefully considering right now,” she said.
While concerns linger over the management of Greece’s credit crisis AB pointed out the “risk of contagion” to other areas in the region remains manageable.
AB also said fears of a breakdown of the euro as a currency have abated and signs of a broad economic recovery have materialised.
“A number of questions remain to be resolved, such as whether the economy will gain momentum, whether disinflation will threaten growth, and whether the European Central Bank is capable of creating policies to foster a sustainable, long-term recovery,” Ms Fay said.
“But even as these questions remain unanswered for now, we think this is a good time for investors to consider capturing the potential of the region’s equity markets, as recovery continues to unfold.”
Ms Fay also pointed out that Europe’s political and economic turmoil in recent years has obscured the fact the region remains home to many successful companies which offer a gateway to opportunities.
“In early 2014, European companies traded at significant discounts to their peers in other global markets because of lingering concern about issues in the euro area,” Ms Fay said.
“Yet, as anxiety has eased, stock correlations have declined sharply from peaks in 2011 as investors have refocused on fundamentals.
“These trends have created excellent conditions for actively managed portfolios to capture the significant return potential we believe is available in Europe,” she said.
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