Pierre DeGagné, DBS Private Bank
DBS is underweight Europe. As we entered 2018, we were less bullish on European equities relative to other markets and adopted a cautious stance. While Europe has displayed solid improvements, the upbeat macro outlook has failed to translate into robust corporate earnings momentum.
This, coupled with a persistently strong euro, presents a seemingly ‘lose-lose’ European equity environment. Furthermore, with a preponderance of exposure to old economy sectors and much less exposure to faster-growing sectors (for instance, the technology sector accounts for only 4% of the Stoxx Europe 600 index), it remains our view that Asia and the US will outperform Europe in Q1 of 2018.
Underweighting Europe doesn’t mean zero exposure. For clients with global equity exposure, we would suggest some European exposure, with a focus on high-quality European managers that are picking companies with unique growth drivers independent of market conditions.
We work with high-conviction managers that run funds such as the Jupiter European Growth fund and Alken European Opportunities.
The portfolio manager for the Jupiter European Growth fund, Alexander Darwall, has more than 30 years of investment experience. He has a razor-sharp focus on finding companies with superior management and differentiated products or services, with high intellectual property and low cap-ex.
Similarly, the portfolio manager and founder of the Alken fund, Nicolas Walewski, emphasises high-conviction and superior names. One example is Wirecard – one of the world’s leading technology payment companies.