By George Evans, CIO, Equities and Portfolio Manager
Investors' perception of the opportunity in European equities has been clouded, but in reality we believe the region is an exciting place to invest. The currency weakness that affected recent European stock performance is, in our view, a short-term story and should not influence one's investment approach.
Additionally, we hold that developed international indices are a poor representation of Europe's future value and require an active manager to provide exposure to higher potential growth areas of the economy.
Despite recent setbacks, the European market's strengths, including its many innovative companies and brand leaders, make it a compelling long-term investment opportunity. We point to four key characteristics that make it so:
1. Market size: Europe remains the second largest investment region in the world. Europe will continue to provide a liquid platform for investors to access equity investments. It's a market that encourages shareholder friendly practices and business growth.
2. Strong brands and businesses: Many valuable brands and companies call Europe home. Europe is the leader in many innovative industries and home to many brands with a high degree of loyalty. These companies offer a compelling investment opportunity through all market environments.
3. A currency boost for exports: Weak currencies are good for exports. Europe is a major trade partner for the United States and the emerging markets. Following three years of a sharp devaluation in the euro and pound, European goods and services have become cheaper for foreign countries.
4. Improving economic data: Key economic data have been improving for several years and by the end of 2016 were back above pre-recession levels for most major European economies.
Learn how we challenge perceptions with Oppenheimer International Growth Fund, visit challengetheindex.com/oigyx
Foreign investments may be volatile and involve additional expenses and special risks including currency fluctuations, foreign taxes and political and economic uncertainties. Eurozone investments may be subject to volatility and liquidity issues.
These views represent the opinions of OppenheimerFunds, Inc. and are not intended as investment advice or to predict or depict the performance of any investment. These views are as of the publication date, and are subject to change based on subsequent developments.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.