Mark Nichols, manager of the F&C European Growth & Income fund, explains why following the stock market recovery he is focusing on company specifics, and not geographies, when investing in European equities.
Stock markets have rallied since the summer of 2011 and investors have been confident enough to venture back into European equities. Franchises that have discernible and sustainable competitive advantages can earn above-average returns on capital over the medium to longer term. This, combined with evidence that economies and stock market returns are uncorrelated, means focussing on company fundamentals rather than broad macro views when making investment decisions is essential. Our analysis of companies focuses more on a business’s long-term earnings prospects, sometimes as much as...
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