While continental Europe “has consistently lagged the rest of the world in terms of coming out of the trough,” Buchanan believes the region is displaying encouraging signs of recovery, which have been overshadowed by the remaining political uncertainty.
“There are continued plans on the horizon in terms of what will happen to Europe as a whole,” he said. “On the other hand, we are beginning to see signs of recent growth coming through. Provided one is selective, actually there are pretty reasonable opportunities.”
The palpable political uncertainty that hangs over the eurozone is “inevitably a concern,” Buchanan said, but this has not deterred him from upping his exposure.
“This week, Greece once again appears in the papers. But economically speaking, would Greece leaving the EU be a big deal? The answer is probably not.
“Like the UK economy’s reaction to Brexit, markets can adjust to certain circumstances which maybe defy previous beliefs. The political risks in Europe are huge but if the course is steered in a sensible way, they might not be as big or have as large an impact as perhaps some people fear.”
But Buchanan admitted the firm is still taking a “fairly unaggressive” investment approach because while he does not seem as frenzied over the upcoming events on the European political calendar, he also does not underestimate the impact these events could have.
That is why Buchanan said all WH Ireland’s portfolios are weighted toward the ultimate safe haven asset – gold.
“We introduced that weighting toward gold in the early part of last year purely and simply as a hedge against some of the risks that were appearing at the time and over time, it has stood us in very good stead,” he said. “There are gold bulls and people who absolutely hate gold, but as an asset class, it is still an important component of portfolio design at certain points in the economic cycle.”
