Europe: why persist with value today?

By Rob Burnett, Neptune’s Head of European Equities

The Neptune European Opportunities Fund remains committed to a value bias. We see a broadening array of opportunities in diversified industries at compelling valuations today.

The most complicated part of the market is the European banks. We are currently overweight in this sub-sector as many banks are at record low price-to-earnings (P/E) and price-to-book (P/B) ratios and are paying record-high cash dividends. Two of our largest holdings, BNP Paribas and Societe Generale are paying over 6 per cent in cash dividends in 2016, reflecting a payout ratio of just 50 per cent of earnings. As a result, banks are the highest yielding sector in the market by a large margin.

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This fund may have a high historic volatility rating and past performance is not a guide for future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and your clients may not get back the original amount invested. References to specific securities are for illustration purposes only and should not be taken as a solicitation to buy or sell these securities. Please remember that forecasts are not a reliable indicator of future performance. The content of this document is formed from Neptune’s views as at the date of issue. We do not undertake to advise you as to any change of our views. Neptune does not give investment advice and only provides information on Neptune products. Please refer to the Prospectus for further details. Neptune Investment Management Limited (“the Company”) is authorised and regulated by the Financial Conduct Authority. The Company is registered in England and Wales, number 4341768, and has its registered office at 3 Shortlands, London, W6 8DA.