The Analyst: It's time to fly the flag for Europe again
Saturday 06 September 2008
I find that Europe generally tends to be an unpopular investment area with the general public. Now, I admit that the start of 2008 was arguably the worst period for European shares since the 1970s, so perhaps investors' hesitance is correct. However, over the long term it has been a superb area in which to be.
Perhaps the investor antipathy stems from Europe's barmy left-of-centre politicians and even barmier bureaucracy. However, as I have mentioned in previous columns, it is a mistake to equate politics, or even economic performance, with stock markets. Until recently, China's phenomenal economic expansion wasn't being translated into stock-market growth. Europe, on the other hand, has many world-class companies that have prospered despite the politicians.
One of my favourite funds investing in the region is Neptune European Opportunities. It launched in November 2002, but the current manager, Rob Burnett, took over in 2005. It is fair to say that at the time I had some reservations: he was undoubtedly extremely bright, but also young and I often look for experience in fund manager. My fears were unfounded – the fund has gone from strength to strength under Burnett's watch, and my opinion of him improves each time we meet. He has, of course, got the support of some highly experienced Neptune old-timers, including managing director Robin Geffen, chief economist Derrick Bartlett and Chris Taylor.
Neptune's process is based on global sector views. The aim is to assess whether each sector is likely to perform well or not, weight them accordingly, and then select the most promising stocks within each sector. The fund managers meet with the in-house economists and analysts to discuss these issues. In the European Opportunities Fund, Burnett is happy to buy wherever stocks offer the most attractive opportunities within the chosen sectors; it generally does not matter to him in which country those stocks are located. The only sector that is an exception is banking, where he believes the disparities between different counties mean that consideration must be paid to geographic location.
The heart of Neptune's success over the last year has been its sector analysis on financials. It was one of the first, if not the first, investment houses to recognise the problems in the sector. It has thus avoided the carnage in banking shares. However, it has not been totally wedded to this idea within the fund; over time, Neptune became conscious that being positive on commodities and negative on financials was an extremely fashionable view. In investment, the fashionable decisions rarely produce the best returns. In July, the managers felt that some adjustments were necessary.
The timing could hardly have been better, given that in the middle of July banks started to move up while the oil sector started to move down. Burnett therefore increased his exposure to financials but he believes this rally will run out over the next couple of weeks; he believes that the sector will struggle again towards late September and October. He will therefore look to exit his positions over the next few weeks.
He is looking for two things before he will become more bullish: the banks admitting that they still have problems and raising more money, and stability returning to the US housing market. This will allow stock markets to focus on future prospects with greater certainty. This year has been good for sterling investors because of the strength of the euro, but Burnett believes this will reverse over the next few months. This may sound like bad news, but he believes a weaker euro would be positive for European stock markets, which are particularly export-orientated (lessons here for the UK, perhaps?).
So remember that the bad times don't last forever, and that stock markets are likely to recover before the economy does. In my view, the Neptune European Opportunities Fund would make an excellent long-term investment.
Mark Dampier is the head of research at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more information about the funds included in this column, visit www.h-l.co.uk/independent
Questions of Cash: I don't use Amazon Prime, but my credit card bill says I do
HSBC becomes first bank to offer five-year fixed rate mortgage with interest rate under 2%
Are finance apps stealing your personal data?
Pension freedoms: How to deal with cold calls from scammers
Women to lose benefits from contracted-out pension scheme
- 1 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 2 Katie Hopkins and The Sun editor are reported to police for incitement to racial hatred following migrant boat column
- 3 Katie Hopkins has just written a piece so hateful that it might give Hitler pause – why was it published?
- 4 Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
- 5 Cancel Sky at your peril: man spends 96 minutes in chat but fails to get rid of service
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...
Day In a Page
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000