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CONTRIBUTORS

Mandana Hormozi

Portfolio Manager, Research Analyst
Franklin Mutual Series

What makes European equity markets appealing now?

In this video, Franklin Mutual Series’ Manda Hormozi explains why she believes attractive valuations and catalysts can continue to propel European markets higher.

  • European stock markets continue to trade at a wide discount to their US counterparts.
  • We see European equities narrowing that gap as the positive effects of monetary stimulus, infrastructure and defense spending and regulatory reforms start to come through.
  • Regulatory reform, consolidation and efforts to improve Eurozone competitiveness can lay the groundwork for stronger investor returns, in our view.
  • The risks for markets are that reforms are not fully implemented, and that energy costs and an aging population constrain economic activity.

WHAT ARE THE RISKS?

All investments involve risks, including possible loss of principal.

The investment style may become out of favor, which may have a negative impact on performance.

Equity securities are subject to price fluctuation and possible loss of principal. Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks. There can be no assurance that multi-factor stock selection process will enhance performance. Exposure to such investment factors may detract from performance in some market environments, perhaps for extended periods.

Active management does not ensure gains or protect against market declines.

International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets. Investments in companies in a specific country or region may experience greater volatility than those that are more broadly diversified geographically.

Small- and mid-cap stocks involve greater risks and volatility than large-cap stocks.

Investments in companies engaged in mergers, reorganizations or liquidations also involve special risks as pending deals may not be completed on time or on favorable terms. Low-rated, high-yield bonds are subject to greater price volatility, illiquidity and possibility of default.

Dividends may fluctuate and are not guaranteed, and a company may reduce or eliminate its dividend at any time.

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IMPORTANT LEGAL INFORMATION

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The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.

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