Report says US-based mutual funds looking for bargains in Europe
A Bloomberg report said mutual funds based in the US have set their eyes on Europe, betting that the region has just started its rally as the US bull market has gone past its prime. Their acquisitions have included oil drillers in the Netherlands, drugmakers in France and food producers in Switzerland.
New York-based manager Oliver Pursche purchased Total and Royal Dutch Shell because as compared to their peers, the said companies had relatively high dividends and low valuations. Pursche beat 97% of his rivals this year, the report said. Meanwhile, Timothy Ghriskey of Solaris Asset Management based in Bedford Hills, New York added Paris-based Sanofi to their portfolio. The report said companies based abroad but get their sales within the US are the favorites of ING Investment Management Head of Asset Allocation Paul Zemsky.
European stocks are attracting managers that hold nearly USD 5 trillion under management after USD 13 trillion was added to the prices of US equities since March 2009. The lure also came as the benchmark Standard & Poor's 500 Index already capped the best gains it has achieved since 2004, the report said. Investors are also betting that the European Central Bank will maintain its economic measures for a longer time even as speculation abounds that the Federal Reserve will start tapering the stimulus in March next year. The European economy is expected to return to growth in 2014.
BlackRock Inc Chief Investment Strategist Russ Koesterich told Bloomberg in a phone interview earlier in December, "This is a good time to be trimming back now and increasing the international allocation. Parts of Europe are under-owned by investors. These are places where there's still a lot of pessimism, so any good news can produce some run-ups in these stocks."
Based in San Francisco, BlackRock is the biggest money manager in the world. As of September 30, it had USD 4.1 trillion.