What region of the world is cheaper than China and growing more rapidly? “Parts of Europe,” says Richard Dyson in The Mail on Sunday. Shares in even the strongest companies are “unfashionable, undervalued and yielding up to 10%”.
So with European stocks in the bargain bin, it could be a good time to buy the Ignis Argonaut European Alpha fund, managed by Barry Norris. The fund aims to achieve consistent and stable high returns by investing in a maximum of 60 European equities. It has returned 53.9% over the past five years.
The investment case for Europe seems to be being overlooked by the market, says Norris. “Chinese stocks trade at 25 times earnings but money still pours in, unlike with European stocks trading at ten times.” The discount on European stocks is partly due to the sovereign debt crisis earlier in the year. Fears that some of the European Union’s debt-riddled members, such as Greece, would collapse and lead to more bank failures and even the death of the euro led many to abandon European equities.
There’s no guarantee that the jitters won’t continue. But so far the fear has in fact been good for many European companies. “It weakened the euro, which was great for exports, but it also forced leaders to deal with illogical aspects of the single currency,” says Norris.
Mark Dampier of Hargreaves Lansdown includes Norris’s fund in his top 150. He is “heavily invested in the core European countries (eg, France, Germany and the Netherlands), staying away from countries where sovereign debt is causing concern.” The fund’s total expense ratio is 1.79%.
Contact: 0800-317749.
Portfolio breakdown
| Geographical split | % of assets |
|---|---|
| Switzerland | 23.0 |
| Germany | 16.6 |
| France | 15.4 |
| Netherlands | 10.7 |
| Cash | 8.8 |
| Finland | 8.0 |
| Spain | 5.1 |
| Other | 4.6 |
| Norway | 4.4 |
| Ireland | 3.4 |