Europe Is Now Best Growth Bet for Stock Manager With $7 Billion
(Bloomberg) -- President Donald Trump may have awakened “animal spirits” in the U.S., but to get the most out of the global economic recovery, stock investors should really look to Europe.
That’s where they’ll get better value, according to Bjorn Lind, a portfolio manager at Stockholm-based AMF Fonder AB.
“Earnings growth will be better in Europe in the coming years and, most importantly, longer,” he said in an interview in Stockholm on Wednesday. “It’s basically based on valuation and the business cycle.”
AMF Fonder is overweight Europe and underweight North America in its global funds, according to the 56-year-old, who oversees 65 billion kronor ($7 billion).
That said, Lind still sees decent economic growth and some upside for U.S. stocks if Trump comes through on his spending and tax-cut pledges.
“If he can deliver some tax cuts, some infrastructure investments, transforming the animal spirit to demand and investments, then it can continue,” he said. “Our basic view is that the U.S. stock market will be at this level, or a bit higher, at the end of the year.”
The biggest holdings at the end of March in AMF Aktiefond Global, which has returned 4.8 percent so far this year, were Microsoft Corp. and Alphabet Inc., the owner of Google.
“Google is much more than the search engine with advertisement revenue,” Lind said. “The balance sheet is strong and they are big and dominating. It’s a demanding valuation but adjusted for their cash it isn’t that dangerous.”
AMF is also snapping up American Express Co. and insurer American International Group Inc., which offer value after some difficulties, according to Lind.
With a positive view of the business cycles, AMF Fonder is overweight industrials and financials while being underweight utilities, consumer staples and real estate. After a correction of bank stocks in the past months Lind says it’s now a good time to invest.
“Many banks are interesting, both the big banks, such as JPMorgan, to the smaller banks such as PNC and KeyCorp,” he said. “Now there’s a new opportunity to buy banks.”