For the past decade, the deflationary economy has driven bond yields lower creating the perfect environment for high growth stocks to flourish. This backdrop saw growth stocks outperform value stocks, with the US leading the growth charge while Europe lagged. As inflation soars and rates rise, could this be the turning point for value to finally outperform growth with Europe leading the way? Find out why we believe this cycle will be different for European equities.

Key takeaways

  • Europe is home to a wide array of world-leading companies and is considered relatively ‘cheap’ in valuation terms compared to the US, offering a compelling entry point for investors.
  • The continent is leading the way in terms of sustainability, with 8 out of the top 10 renewable energy companies domiciled in Europe (ex-China). We believe Europe is well placed to benefit from its market-leading position as sustainability grows in importance.
  • The European Central Bank’s response to the COVID-19 has been characterised by speed and volume, offering space for European economics to recover from the economic shock of the crisis and providing a promising backdrop.