Gartmore’s Roger Guy and Guillaume Rambourg are positive on the medium term outlook for European equities, identifying cyclicals as one of the key beneficiaries of any rise in markets.
The managers of the £1.8bn European Selected Opportunities fund say it has exposure to cyclical stocks positioned to benefit from a rebound, as well as core defensive names in the utilities and telecoms sectors.
Meanwhile, it has benefited from selective exposure to leading financial stocks, particularly in the banking sector.
Guy and Rambourg say recent data supports an upswing in European markets.
"Thanks to extraordinary government and central bank intervention, economic indicators and earning upgrades now signal an improvement in the overall health of the financial system," they say.
"Despite the recent consolidation we believe that the positive story for equities is pretty much intact for the next three to six months, with equity inflows, and yet more upgrades at the GDP and corporate earnings level."
"However, longer term there are major risks and question marks looming, with inflation and interest rate rises topping the agenda."
