You are here: Home - Saving & Banking - News -

Large caps to dominate in 2008

Written by:

European mid caps outperformed large caps from 2000 to 2006 in part due to exposure to Europe’s economic recovery, according to Gartmore.

While traditional investors explored alternative investment strategies such as commodities and hedge funds, liquid large caps were being sold to fund this alternative trade. De-equitisation, through private equity deals and corporate M&A also supported the mid-cap trade.
However, this began to reverse in the second half of 2007, according to Roger Guy, manager of the Gartmore European Investment Trust and co-manager with Guillaume Rambourg of the Gartmore European Selected Opportunities Fund and the SICAV Continental European Fund. They believe large caps will likely drive performance this year following a flight to quality, precipitated by the recent market dislocation.

Both the European Selected Opportunities Fund and the SICAV Continental European Fund are strategically positioned to reap the benefits of a number of defensive, largely undervalued large cap stocks which typically prove more resilient during unsettling periods. Exposure to international growth, not within the reach of small or mid-caps, compelling valuations (large caps on average trade at a 10% to small caps), higher liquidity and visibility, stronger balance sheets and possible resurgence in M&A activity in 2008 also provide a very supportive backdrop to large caps.

Stocks including steel maker Arcelor Mittal, engineering company Siemens and food producer Nestle feature among the predominately large cap portfolios of Roger and Guillaume, contributing positively to the funds’ performance over the 4th quarter 2007.

Guy said: “European large-cap companies offer both compelling valuation and liquidity while mid-caps have kept their valuation premium. Large caps tend to outperform in volatile conditions by virtue of their greater resilience to market shocks. Exposure to emerging markets, an accommodative US monetary policy and resurgence in M&A activity in 2008 should continue to support this sector.”


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
ABN AMRO backs high-income products

UK investors are more likely to invest in individual shares and savings accounts for future income than their European counterparts,...