Cyclicals and small caps will struggle to deliver

ON EUROPE

F&C's Paras Anand believes structural and large-company stocks will lead the market in 2011.

Going back to the beginning of last year, the euro was weakened by the re-assessment of the solvency of the peripheral economies. Nevertheless, we believe the valuations of the market in aggregate, together with strong corporate cashflows, should mean equities are an attractive long-term prospect, particularly relative to bonds. We have expressed this view over the last two years and believe there has been a growing realisation among investors of the attraction of equities versus bonds. The sovereign debt crisis will rumble on and is unlikely to reach an orderly conclusion any time so...