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Are European equities the place to be right now?

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After shockwaves reverberated across the financial markets following Britain’s vote to leave the European Union and Trump’s rise to US President, there was plenty of fear from Investors about the implications of anti EU parties taking a stronghold in the Netherlands and French elections.

Hindsight is a wonderful thing, isn’t it?

Unlike the UK and US outcomes, European voters heads weren’t turned enough by the idea of change and a degree of political normality and stability has been the result.

With the German election coming up later in the year, can anyone really see a shift in the political status quo there – enough to see any further unsettling of the European Union anyhow?

Politically, things appear to be looking a lot more certain for the EU than they have done of late.

Economically, the region is beginning to string together some very strong data too.

Angela Bouzanis, Senior Economist at Focus Economics suggests – “Growth continues to show signs of broadening as the Eurozone’s recovery benefits from strengthening internal and external demand. A firming labor market and a brighter global growth environment are supporting sentiment within the bloc, which came in at a level not seen since 2007 in April. Moreover, other economic indicators continue to record positive readings, highlighted by the composite PMI’s six-year high in April.”

What has this all meant for European Equities?

Well, the DAX and the CAC (the two major indexes for Germany and France respectively) have posted consistent growth throughout 2017. The EuroStoxx 50 which benchmarks the top 50 businesses listed on stock exchanges across the Eurozone has also seen strong upward momentum since the end of 2016. European equities are on the rise.



So how can investors take advantage of this growth?

Well, there’s a number of options available to you. You could look to purchase a selection of carefully chosen stocks across a diverse range of sectors, or you can look at active or passive funds, depending on your preference.

Hargreaves Lansdown offer a collection of their favourite funds within their Wealth 150+ service which includes funds that offer a combination of first-class long-term performance potential and low management charges (through the Hargreaves Lansdown platform).

Here are the Active European funds that Hargreaves Lansdown include within their Wealth 150+ list, and their performance over the last 5 years.

Fund name May 12 to May 13 May 13 to May 14 May 14 to May 15 May 15 to May 16 May 16 to May 17
Baring Europe Select (Class I GBP) (Inc) 37.83% 16.45% 11.19% 9.46% 34.37%
FP CRUX European Special Situations (Class I) (Acc) 40.00% 7.30% 10.66% 6.70% 30.09%
Threadneedle European Select (Class Z) (Acc) 37.57% 4.91% 12.85% 0.68% 26.49%
TM Sanditon European (Acc) n/a n/a n/a -3.18% 28.04%

This passive tracker fund has made it into their Wealth 150+ list and with a net ongoing charge of 0.09%, it represents very good value.

Fund name May 12 to May 13 May 13 to May 14 May 14 to May 15 May 15 to May 16 May 16 to May 17
Legal & General European Index Class C – (Acc) n/a n/a 6.89% -4.47% 32.94%

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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