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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

This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. All investments involve risks, including possible loss of principal. There is no guarantee that a strategy will meet its objective. Performance may also be affected by currency fluctuations. Reduced liquidity may have a negative impact on the price of the assets. Currency fluctuations may affect the value of overseas investments. Where a strategy invests in emerging markets, the risks can be greater than in developed markets. Where a strategy invests in derivative instruments, this entails specific risks that may increase the risk profile of the strategy. Where a strategy invests in a specific sector or geographical area, the returns may be more volatile than a more diversified strategy.

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