Is it time to dip a toe back into European equities?

Following a challenging 2022 for European equities, VT Downing Unconstrained European Equity Income Fund Managers Mike Clements and Pras Jeyanandhan explain why they are more optimistic on the asset class

European equity markets kicked off 2023 in an upbeat mood, rallying strongly on vastly improving market sentiment. Following the many challenges thrown up last year, Mike Clements and Pras Jeyanandhan, managers of the VT Downing Unconstrained European Equity Income Fund, now see reasons to be more optimistic on the asset class.

The pair search for investment ideas across the market spectrum, but of particular interest right now are smaller company shares which were hit particularly badly last year and are about as cheap as they have been since the global financial crisis.

Inefficiencies are most extreme in the less liquid parts of the market, where some exciting companies reside in dusty corners, away from the full glare of investors. Less information is available on these ‘under the radar’ ideas, creating an opportunity to be rewarded for uncovering insights that are not reflected in the share price. In embracing smaller companies, they look for winners coming out of Europe’s troubled situation and try to build these positions at attractive valuations.

In this short video, Mike and Pras explain some of the features that differentiate their investment approach and discuss why now is the time for patient investors to dip a toe, or even dive right into, a market that is bursting with opportunities.

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