Partner Insight: Four perspectives on global equity

Partner Insight: Four perspectives on global equity

Despite the return of volatility, there's plenty of growth and value to be found across global equity markets by active managers. What's more, compelling alternatives are available for those looking for a differential in their equity allocations. Darren Pilbeam, UK Head of Sales at Natixis Investment Managers, rounds-up the latest equity manager views from Natixis' multi-affiliate platform

For most of 2019 thus far, the macroeconomic view has surveyed green shoots appearing in the global economy. And while a stabilisation in growth is expected over the coming quarters, it should come as no surprise that the escalation of the US/China trade war in the past few weeks has certainly increased the downside risks. That's the outlook for capital markets according to Esty Dwek, Head of Global Market Strategy for Dynamic Solutions at Natixis Investment Managers. "Equity markets have sold off since the re-escalation of the trade war, as expected," said Dwek. "While the growth outlook remains ok, downside risks have risen. At the same time, earnings in the US have beaten expectations, bringing some underlying fundamental support to markets.

"For now, markets remain jittery but still seem to be pricing in a US/ China agreement, so short-term corrections on more negative headlines are likely. Over the medium-term though, barring a total breakdown in the trade talks, we expect risk assets to continue to grind higher, supported by an accommodative central bank and solid growth and earnings."

The hunt for value

In the US, equities have certainly enjoyed a rally since the beginning of 2019. A better-than-expected earnings season and almost $200 billion of buybacks by the end of April supported their advance. Those searching for value have therefore had to look elsewhere. Speaking on CNBC's Closing Bell in April, David Herro, Portfolio Manager at Harris Associates, said that while valuations of US equities had seen a resurgence, it had not necessarily been the case across Europe.

"There are still places where there is lots of undiscovered value," said Herro. "Specifically, when you look at European equities, they have been held back by some of the macro issues that I would argue have held back their share prices, but we still see good value creation and, as a result, we still see good investable opportunities in European stocks.

"Most of the big European companies are multinational, they have exposure to… emerging markets and the US, and especially when the euro is trading at such a low level… [this] translates back to more of an advantage for European equities that sell into dollar markets and have dollar revenues." Those chasing value in European equities might want to take a look at Harris' equity strategies.

The patient, long-term approach of its portfolio managers enables them to appreciate when portfolio companies are undervalued and, therefore, select them when they are attractively priced - then wait for the market to recognise what they believe is the company's true worth. It's an approach that has been one of the hallmarks of Harris' success since its inception in 1976.

Click here to read more from Natixis, and where the investable opportunities are in Europe

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