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  • FIRST POST
    • Sally57
    • By Sally57 11th May 17, 2:29 PM
    • 85Posts
    • 18Thanks
    Sally57
    European Equities Undervalued?
    • #1
    • 11th May 17, 2:29 PM
    European Equities Undervalued? 11th May 17 at 2:29 PM
    Are European Equities undervalued compared to other regions, US, UK, Japan, Asia ex Japan etc?

    We are all looking where next to invest with our ISA allowance and I personally feel that Europe at the moment is possibly the best option for some extra investment. My current European funds although only a small part of my overall portfolio are performing well. Germany is riding high, Scandinavian countries are doing well and even Spain is doing a lot better - any thoughts or views?
    Last edited by Sally57; 11-05-2017 at 2:47 PM.
Page 1
    • bowlhead99
    • By bowlhead99 11th May 17, 3:44 PM
    • 6,688 Posts
    • 11,879 Thanks
    bowlhead99
    • #2
    • 11th May 17, 3:44 PM
    • #2
    • 11th May 17, 3:44 PM
    My current European funds although only a small part of my overall portfolio are performing well. Germany is riding high, Scandinavian countries are doing well and even Spain is doing a lot better - any thoughts or views?
    Originally posted by Sally57
    Are you saying you have funds for each of those individual countries you named? And if they are doing well is that a reason to pile into them? The US and Asian funds have also been doing well.

    Or are you saying those European countries' economies are doing well but you don't have any funds exposed to them? If so, get some, but be aware that growth in an economy is different from growth of a stockmarket and they are not always in sync. How is Spanish youth unemployment at the moment? And where should Spanish supermarkets or banks be valued. Are you a macroeconomics expert to project the economy as well as being a stocks analyst to project the market?

    If so, jolly good, but I expect most here aren't so take opinions with a pinch of salt and if in doubt, invest very broadly as most of us do, rather than try to time it with specific regional plays.
    • MPN
    • By MPN 11th May 17, 3:44 PM
    • 220 Posts
    • 70 Thanks
    MPN
    • #3
    • 11th May 17, 3:44 PM
    • #3
    • 11th May 17, 3:44 PM
    I have just increased my holding in Vanguard FTSE Developed Europe Ex UK and Baillie Gifford European mainly because I believe they have done well for me over the past 4.5 years. When I looked where to invest this year I felt there is more to come in Europe compared to some of the other regions.

    The Baillie Gifford fund is primarily lead by Swedish, Swiss and German equities (55%) and to a lesser extent by French, Danish, Dutch, Italian & Finnish equities etc. Therefore, I feel this goes well with my blanket Vanguard tracker for this region.
    • Superscrooge
    • By Superscrooge 11th May 17, 7:37 PM
    • 852 Posts
    • 592 Thanks
    Superscrooge
    • #4
    • 11th May 17, 7:37 PM
    • #4
    • 11th May 17, 7:37 PM
    I invested this years ISA allowance in Fidelity Index Europe Ex UK and it's already up 3.5%.
    But of course what goes up can also go down!
    • jamei305
    • By jamei305 11th May 17, 8:25 PM
    • 198 Posts
    • 246 Thanks
    jamei305
    • #5
    • 11th May 17, 8:25 PM
    • #5
    • 11th May 17, 8:25 PM
    It may be undervalued in some statistical sense but then you have to price in risks such as Italian elections and systemic problems with the Euro etc. If you take a positive view on these it might still look undervalued, or you might think the current value is actually reasonable all things considered.
    • Morphoton
    • By Morphoton 11th May 17, 8:26 PM
    • 47 Posts
    • 45 Thanks
    Morphoton
    • #6
    • 11th May 17, 8:26 PM
    • #6
    • 11th May 17, 8:26 PM
    The website below will give you figures on various metrics for various countries.
    http://www.starcapital.de/research/stockmarketvaluation
    However whist it gives a "whole Europe" figure, it does show big differences in valuations between individual European countries.
    Whilst it may seem to make sense to invest in countries with a low CAPE, AFAIK this is no evidence that this gives better returns and there are big arguments for and against this thesis.
    Personally I have a fixed % in each of the above areas you mention and rebalance when they get too far away from target. Currently using TR European Growth IT for European exposure, but I do have a personal bias to medium/small companies. This IT has served me well over the last 20 years.
    • fun4everyone
    • By fun4everyone 11th May 17, 8:30 PM
    • 818 Posts
    • 1,358 Thanks
    fun4everyone
    • #7
    • 11th May 17, 8:30 PM
    • #7
    • 11th May 17, 8:30 PM
    I bought "Jupiter European" and it has done well for me
    • bigadaj
    • By bigadaj 11th May 17, 10:32 PM
    • 9,907 Posts
    • 6,326 Thanks
    bigadaj
    • #8
    • 11th May 17, 10:32 PM
    • #8
    • 11th May 17, 10:32 PM
    European assets trust has performed well for me since last summer, bought post Brexit vote so sterling devaluation has had little influence, on capital if not earnings.
    • Reaper
    • By Reaper 12th May 17, 9:54 AM
    • 6,105 Posts
    • 4,171 Thanks
    Reaper
    • #9
    • 12th May 17, 9:54 AM
    • #9
    • 12th May 17, 9:54 AM
    Whilst it may seem to make sense to invest in countries with a low CAPE, AFAIK this is no evidence that this gives better returns and there are big arguments for and against this thesis.
    Originally posted by Morphoton
    If you do decide low CAPE investing in Europe is something you want to try the "Ossiam Shiller Barclays Cape Europe Sector Value" (ticker CAPE) invests in low CAPE sectors within Europe.

    I offer no opinion on whether it's a good idea or not.

    As far as Europe generally goes my main fear is a "Hard Brexit" which IMO is looking fairly likely. That doesn't just hurt the UK it will hurt the European companies that export to us.
    Last edited by Reaper; 12-05-2017 at 9:57 AM.
    • Sally57
    • By Sally57 12th May 17, 11:21 AM
    • 85 Posts
    • 18 Thanks
    Sally57
    Are you saying you have funds for each of those individual countries you named? And if they are doing well is that a reason to pile into them? The US and Asian funds have also been doing well.

    Or are you saying those European countries' economies are doing well but you don't have any funds exposed to them? If so, get some, but be aware that growth in an economy is different from growth of a stockmarket and they are not always in sync. How is Spanish youth unemployment at the moment? And where should Spanish supermarkets or banks be valued. Are you a macroeconomics expert to project the economy as well as being a stocks analyst to project the market?

    If so, jolly good, but I expect most here aren't so take opinions with a pinch of salt and if in doubt, invest very broadly as most of us do, rather than try to time it with specific regional plays.
    Originally posted by bowlhead99
    Wow, well I supposed I asked for that response because I really didn't explain myself very well, so thank you Bowlhead for your comments.

    In the past I have not fully committed to Europe in my portfolio (only 5% in a Vanguard tracker) and as I now have some funds available to put into my ISA, I thought I would increase my holding in Europe to include an active fund or IT. This is mainly because other markets including the US and Asia seem quite expensive at the moment but also because Europe seems undervalued IMHO. Therefore, I was really asking for views.

    The type of European fund or IT I was looking for was in the stronger economies such as the Baillie Gifford fund that MPN pointed out in his post. This is one to consider as it seems to tick the boxes but I would like to look further into some IT's before making a decision so thank you to those who suggested a couple of IT's to research..
    • AnotherJoe
    • By AnotherJoe 12th May 17, 1:47 PM
    • 7,221 Posts
    • 7,725 Thanks
    AnotherJoe
    Wow, well I supposed I asked for that response because I really didn't explain myself very well, so thank you Bowlhead for your comments.

    In the past I have not fully committed to Europe in my portfolio (only 5% in a Vanguard tracker) and as I now have some funds available to put into my ISA, I thought I would increase my holding in Europe to include an active fund or IT. This is mainly because other markets including the US and Asia seem quite expensive at the moment but also because Europe seems undervalued IMHO. Therefore, I was really asking for views.
    Originally posted by Sally57
    By what metric(s)? And taking sterling into account or not?
    • MPN
    • By MPN 12th May 17, 4:47 PM
    • 220 Posts
    • 70 Thanks
    MPN
    Wow, well I supposed I asked for that response because I really didn't explain myself very well, so thank you Bowlhead for your comments.

    In the past I have not fully committed to Europe in my portfolio (only 5% in a Vanguard tracker) and as I now have some funds available to put into my ISA, I thought I would increase my holding in Europe to include an active fund or IT. This is mainly because other markets including the US and Asia seem quite expensive at the moment but also because Europe seems undervalued IMHO. Therefore, I was really asking for views.

    The type of European fund or IT I was looking for was in the stronger economies such as the Baillie Gifford fund that MPN pointed out in his post. This is one to consider as it seems to tick the boxes but I would like to look further into some IT's before making a decision so thank you to those who suggested a couple of IT's to research..
    Originally posted by Sally57
    As I already mentioned, I also have a small Vanguard FTSE Europe ex UK tracker but feel the Baillie Gifford active fund really works well as an actively managed alternative which tends to concentrate on the more stronger/successful Northern European countries.
    • Thrugelmir
    • By Thrugelmir 12th May 17, 5:51 PM
    • 55,145 Posts
    • 48,335 Thanks
    Thrugelmir
    European equities is generic term. I always look closely at the top 10-20 holdings in a fund. Where does the fund manager see value and why. What attracts them to a sector or particular companies. Then rationalise in my own head as to whether this is a good time to buy or add the fund to my tracking list. Waiting for the news coverage to evaporate and a better buying opportunity to arise. Currency exchange rates are worth tracking. With regards to the Eurozone I only ever buy at a rate over €1.40.
    “ “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell.” Sir John Marks Templeton
    • Sue58
    • By Sue58 19th May 17, 1:59 PM
    • 78 Posts
    • 11 Thanks
    Sue58
    Currency exchange rates are worth tracking. With regards to the Eurozone I only ever buy at a rate over €1.40.
    Originally posted by Thrugelmir
    You could be waiting a very long time to buy over 1.40. At present its about 1.16 and I believe over the past couple of years it has fluctuated between 1.1 and 1.3 but not got anywhere close to 1.40 for many years.
    • Sue58
    • By Sue58 19th May 17, 2:05 PM
    • 78 Posts
    • 11 Thanks
    Sue58
    As I already mentioned, I also have a small Vanguard FTSE Europe ex UK tracker but feel the Baillie Gifford active fund really works well as an actively managed alternative which tends to concentrate on the more stronger/successful Northern European countries.
    Originally posted by MPN
    I also hold a small amount in the Vanguard FTSE Europe ex UK tracker but also hold an IT Henderson European Focus Trust.

    I did consider the Baillie Gifford European OEIC fund and also the Jupiter European Opportunities IT but in the end I went for the Henderson IT.
    • redmalc
    • By redmalc 19th May 17, 2:36 PM
    • 1,243 Posts
    • 469 Thanks
    redmalc
    Sue 58 i received 1.395 euros to the £ on the 29/06/2015 via this site
    • Sally57
    • By Sally57 19th May 17, 2:59 PM
    • 85 Posts
    • 18 Thanks
    Sally57
    I also hold a small amount in the Vanguard FTSE Europe ex UK tracker but also hold an IT Henderson European Focus Trust.

    I did consider the Baillie Gifford European OEIC fund and also the Jupiter European Opportunities IT but in the end I went for the Henderson IT.
    Originally posted by Sue58
    As I mentioned in my previous post I have been researching different European IT's and really like the Henderson European Focus Trust and the Manager (who also looks after the equivalent OEIC fund) has been there a long time and is very well experienced.

    I chose the Henderson IT over Fidelity European Values and the Jupiter European Opps and although there is nothing wrong with the BG OEIC fund I preferred an IT in the end.
    • EdGasketTheSecond
    • By EdGasketTheSecond 19th May 17, 3:02 PM
    • 207 Posts
    • 106 Thanks
    EdGasketTheSecond
    I'm backing Britain
    • eskbanker
    • By eskbanker 19th May 17, 3:29 PM
    • 5,466 Posts
    • 5,269 Thanks
    eskbanker
    You could be waiting a very long time to buy over 1.40. At present its about 1.16 and I believe over the past couple of years it has fluctuated between 1.1 and 1.3 but not got anywhere close to 1.40 for many years.
    Originally posted by Sue58
    It was over 1.40 as recently as December 2015, i.e. less than 1.5 years ago!
    • MPN
    • By MPN 19th May 17, 3:49 PM
    • 220 Posts
    • 70 Thanks
    MPN
    As I mentioned in my previous post I have been researching different European IT's and really like the Henderson European Focus Trust and the Manager (who also looks after the equivalent OEIC fund) has been there a long time and is very well experienced.

    I chose the Henderson IT over Fidelity European Values and the Jupiter European Opps and although there is nothing wrong with the BG OEIC fund I preferred an IT in the end.
    Originally posted by Sally57
    I'm quite interested to know why you eventually decided on the Henderson IT instead of the Baillie Gifford European OEIC fund to compliment your existing Vanguard tracker in Europe?
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