As some respondents indicated they have reached their maximum allocation to European stocks and all are overweight in the asset class, fund selectors can still be considered extremely upbeat on the asset class. Though most interviewees agree that EU equities are getting a little expensive, most still see upside. One respondent said he is particularly keeping an eye on the European periphery, expecting the recent re-rating of peripheral sovereigns will have a positive influence on company earnings in these countries.
US stocks: expensive, but still attractive
German fund selectors definitely favour EU equities over US stocks, which many consider expensive. Still, sentiment is broadly positive with the number of respondents increasing their allocation to the asset class twice as high as the number reducing their exposure, saying US companies have an edge over European companies as they tend to be more domestically focused and have less exposure to emerging markets than for example German companies. Solid economic growth prospects and sound profit margins were also cited as reasons to step up investments in US-based companies.