Why Europe's defensives are no longer defensive

ON EUROPE

The massive rally in Europe's low volatility stocks from food and beverage to personal care means these stocks are no longer defensive, said ING's senior portfolio manager Manu Vandenbulck.

What an extension of the bull market for European equities there has been since we last wrote for this column in August of 2012. Back then, we argued European equities were still undervalued and under-owned, and investors were very worried, especially over the survival of the EU and its currency. Now that European stocks are up another 30% in the past 14 months, the dividend yield has dropped from 5% to about 3.3%, and investing in European companies – even Spanish ones – is much less contrarian than a year ago. So is there any value left? The cyclically adjusted P/E ratio has incr...