Bringing you live news and features since 2006 

Ayjay Gambhir, RWC

Opportunities abound for European equities


Manager of the RWC Europe Absolute Alpha Fund, Ajay Gambhir (pictured) believes that European Equities offer his equity long/short strategy some of the greatest investment opportunities in the last ten years.

Gambhir has highlighted two reasons for optimism for the asset class.  Firstly, the dislocations in European equities have been so severe that the opportunity for long/short investing between sectors and stocks is greater than it’s been for almost ten years. Secondly, the almost unprecedented gap in value between European equities and European corporate credit opens up the opportunity for money to rotate into European stocks, with the greatest benefit to accrue to higher yielding European stocks.
“Europe is looking increasingly attractive; inflation expectations have stabilised and equities are cheaper than usual compared to the US. The ECB’s bond-buying plan means they are ready to stand behind the Euro, reducing the tail risk. Credit investors having been moving up the risk curve so, logically, the next large opportunity is for money to rotate from credit into equities, given the large valuation gap.”
According to Gambhir, the variation of valuations within sectors is higher for 75 per cent of sectors than five years ago, before the financial crisis began. “From a long/short perspective, it is interesting how the market has polarised with 50 per cent of the Stoxx 600 European stocks with dividend yields higher than the average European corporate bond yield. As the market begins its quest for value in Europe (as opposed to looking for safety or QE beneficiaries), and at the same time pays attention to earnings, these will be come into focus and drive share prices.”
The fund was conservatively positioned for much of 2012 due to the on-going tail risk in European equities but Gambhir is positioning the start of 2013 to reflect his increasing confidence in the environment.  “In 2013, I think as tail risk has subsided, we are much more inclined to take up our net and gross exposure to really maximise the opportunities presented by the dislocations.”


Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by