The Great Wall Street Joke Book was published in 1986. It was perhaps well timed, given that there was precious little humour to be mined from the Black Monday crash that hit markets the following year. Permit me to wow you with one of its gags.\u00a0<\/p>\n
A stockbroker\u2019s secretary answered his phone one morning:\u00a0<\/p>\n
\u201cI\u2019m sorry,\u201d she said. \u201cMr Bradford is on another line.\u201d\u00a0<\/p>\n
\u201cThis is Mr Ingram\u2019s office,\u201d the caller said. \u201cWe\u2019d like to know if he\u2019s bullish or bearish right now.\u201d\u00a0<\/p>\n
\u201cHe\u2019s talking to his wife,\u201d the secretary replied. \u201cRight now, I\u2019d say he\u2019s sheepish.\u201d\u00a0<\/p>\n
It is hardly a timeless rib-tickler, less still an advert for 21st-century gender equality.<\/p>\n
If nothing else, though, it somehow taps into the present-day landscape of European equities \u2013 because sheepishness has long been a key characteristic of many investors\u2019 approach to this arena. Broadly speaking, this tendency has revolved around viewing Europe in a particularly negative, unimaginative way. Unfortunately for the herd \u2013 or, if you prefer, the flock \u2013 such perceptions are now dramatically removed from the reality of the region\u2019s investment attractions.<\/p>\n
The misframing of Europe\u00a0<\/p>\n
For decades now, it has been tempting to see Europe through a prism of low growth. Even the European Commission has consistently deployed euphemisms such as \u201cgradual expansion\u201d, fuelling the knee-jerk inference that outperformance is more likely to be found elsewhere.\u00a0<\/p>\n
Many investors have thus effectively become apologists for the region. So have many investment professionals \u2013 some for their entire careers to date. They have simply clung to the idea of Europe as a place where numerous global businesses happen to be domiciled.\u00a0<\/p>\n
The changing composition of the MSCI Europe index over the past 15 years tells the tale. In 2010, there was a pretty even divide between companies with non-euro-denominated revenues and companies with euro-denominated revenues, but today the split is closer to 70\/301.<\/p>\n
This shift reflects a fondness for European-domiciled businesses that trade at a decent discount, just about merit a spot in sensibly diversified portfolios and \u2013 above all \u2013 explicitly entail no exposure to the domestic economy. For the herd, as far as Europe is concerned, that has been good enough.\u00a0<\/p>\n
Yet a second, more recent and more rapid shift has also taken place. Largely thanks to the far-reaching repercussions of President Donald Trump\u2019s return to the Oval Office, the appeal of Europe as a whole has suddenly become much more apparent.<\/p>\n
As a result, more investors are gradually realising the framing they have relied on for so long is \u2013 and arguably always has been \u2013 misguided. They are grasping that Europe\u2019s domestic economy is precisely what they should be exposed to. But they are already behind the curve.\u00a0<\/p>\n
Signs of a genuine renaissance\u00a0<\/p>\n
We see several fast-emerging tailwinds for Europe. Most stem from how the region has responded to Trump\u2019s stance on issues such as trade and defence. First, fiscal policy in central Europe is being transformed. This is most obviously illustrated by Germany\u2019s mould-breaking \u20ac500 billion spending plans, which were finalised in March \u2013 even by the fallout from Trump\u2019s Liberation Day announcement on tariffs.<\/p>\n
Defence budgets are set to rise significantly. The recent NATO summit concluded with a promise to hike related spending to 5% of GDP by 20352 \u2013 a move Trump hailed as \u201ca big win for Europe and western civilisation\u201d.\u00a0<\/p>\n
Consumption and income are also on the up. In January, the European Union (EU) reported rises in both the EU and the eurozone during Q3 2024, with especially notable climbs in countries such as Greece, Hungary and Spain3.\u00a0<\/p>\n
Meanwhile, in light of the US\u2019s ongoing woes, the dollar may be entering a lengthy period of relative weakness. This clearly represents a boost for businesses with euro-denominated revenues.\u00a0<\/p>\n
Relatedly, the bizarre notion that long-term investment success can be derived from holding only a handful of US technology titans has been blown out of the water. Investors are once again casting their nets more widely \u2013 and Europe is their likely first port of call.<\/p>\n
Positioned to seize unrecognised opportunities\u00a0<\/p>\n
All this could be unhappy news for those investors who have relentlessly applied the \u2018low-growth Europe\u2019 lens \u2013 not to mention those who have been underweight Europe in general. Many now find themselves less than ideally positioned.\u00a0<\/p>\n
By contrast, strategies such as the Artemis SmartGARP European Equity Fund<\/a> have long maintained a suitably constructive view. The key for us has been to concentrate on earnings growth in domestically focused companies rather than international players.\u00a0<\/p>\n Overall, even within the active management community, scant attention is paid to such businesses. This is mainly because most investment analysts prefer to \u2018eyeball\u2019 large-cap and mega-cap stocks, which are usually global entities.\u00a0<\/p>\n The attractions of smaller, domestically oriented companies, therefore, routinely go unnoticed. In this regard, sadly, the sheep have had the wool well and truly pulled over their eyes.\u00a0<\/p>\n Of course, one of the greatest joys of diligent stockpicking is to identify and invest in promising businesses before the herd \u2013 or, again, the flock \u2013 recognises their long-term potential. In Europe, as in any setting, it can be extremely rewarding to get in \u2018on the ground\u2019.\u00a0<\/p>\n Many such opportunities still exist. But investors will be able to seize them only if they finally recognise that the landscape of European equities \u2013 rather like the alleged wit of Wall Street in 1986 \u2013 is no joke.<\/p>\n Toby Gibb, Head of Investment Solutions, Artemis<\/strong><\/p>\n Source<\/p>\n Factset to 30\/06\/2025<\/p>\n<\/li>\n https:\/\/www.theguardian.com\/world\/live\/2025\/jun\/25\/nato-donald-trump-mark-rutte-europe-latest-live-news<\/a><\/p>\n<\/li>\n https:\/\/economy-finance.ec.europa.eu\/economic-surveillance-eu-economies_en<\/a><\/p>\n<\/li>\n<\/ol>\n Important information<\/strong><\/p>\n FOR PROFESSIONAL INVESTORS AND\/OR QUALIFIED INVESTORS AND\/OR FINANCIAL INTERMEDIARIES ONLY. NOT FOR USE WITH OR BY PRIVATE INVESTORS. This is a marketing communication. Before making any final investment decisions, and to understand the investment risks involved, refer to the fund prospectus and KIID\/KID, available in English and in your local language (depending on local country registration), from the relevant fund page or literature section on www.artemisfunds.com<\/a>. The documents can also be found on www.fundinfo.com<\/a>.\u00a0<\/p>\n CAPITAL AT RISK. All financial investments involve taking risk and the value of your investment may go down as well as up. This means your investment is not guaranteed and you may not get back as much as you put in. Any income from the investment is also likely to vary and cannot be guaranteed.\u00a0<\/p>\n Investment in a fund concerns the acquisition of units\/shares in the fund and not in the underlying assets of the fund.\u00a0<\/p>\n\n