Higher exposure to cyclical industries gives Europe the investment edge over the US, according to BlackRock Global Equity fund manager Andrew Williamson-Jones.
The manager says should investors believe in the global recovery story, European stocks will outperform their US counterparts.
"The stock markets of Europe are more exposed to so-called cyclical industries which in a recovery perform better than defensive industries, which make up a greater proportion of the US stock market," Williamson-Jones says.
"In a downturn these businesses are hit hard, but in recovery they can be very effective investments as customers return and as confidence and valuations recover."
The fund manager says the US stockmarket has a greater proportion of defensive industries such as pharmaceuticals.
"Even within the more defensive areas of the market, European companies tend to have greater cyclicality, for instance, consumer staples like Kraft have over 80% of profits in the US whilst UK based SAB Miller has over 75% of profits from emerging markets," Williamson-Jones says.
He also adds there is more mileage in the recovery of European financials.
"The US was first into the downturn and was the first to start to recover," Williamson-Jones says.
"US financials were no different, but that means that US financials, JP Morgan for example, have already climbed further out of the valley and trade on a 20% higher valuation than their cousins in Europe."
