(August 2020)

Investors have been increasingly allocating capital to European funds. On the surface it may seem a surprise. European equities have always had a dull reputation to American investors, and they have suffered very significant falls since the start of the pandemic. However, a few factors make them interesting. Firstly, the ECB and EU member states have been very accommodative with both fiscal and monetary policy, including very recently, which looks likely to pave the way for appreciation. Additionally, the Stoxx 600 is still down 10% on the year versus a 6%+ rise in US equities, meaning European stocks seem to have more room for gains. Finally, European funds have changed over the years, with indexes not so dominated by banks, meaning more earnings growth and less volatility.

FINSUM + Magnifi: European funds seem like a great play right now. You have very aggressive government support and plenty of room for appreciation. Finally, the whole European economy seems to be emerging out of the recession more quickly than the US.

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