Because opportunities can be found in small cap, mid cap and private equity.

To be wary of European equities is natural, given the political turmoil. It is also wise, given that, compared to the U.S., Europe has had lower returns and earnings as well as higher volatility. 

But don’t let headlines blind you to a fascinating subplot:

  • Broad market performance is being dragged down by Europe’s large caps, which have been, and are likely to continue, mirroring global and emerging market risk. 
  • Overlooked but performing well are investments that are more reflective of Europe’s domestic economies: small cap, mid cap and private equity. In fact, the smaller and more domestic, the better company performance has been.

The types of risk that an investor should want to own in Europe right now are therefore small, domestic and intertwined with sectors (like real estate and technology) that have the greatest earning potential.

Interested in how we came to these conclusions? Read our report: The secrets of European small caps’ success