Europe recovery creating opportunities for investors

What are some of the investment themes you’re seeing which excite you at the moment?

One of the big ones which we’re really interested in is recovery in Europe, which I think people might be surprised by. The picture that people will have in their mind is that Europe’s a place that never grows, never changes, very hidebound - it’s hopeless this place, right? And it’s useful to remember a phrase I think was said by Tony Benn, which is, “Never waste a good crisis”. And Germany hasn’t wasted this crisis. All across Europe now we see improved current accounts, very very competitive places - Spain’s just handed two million jobs in two years, in an economy of 40 million people. So, you’re really seeing this place having turned a corner, and earnings are way behind where they’ve been previously, and way behind where they’ve got to in the U.S. So, you don’t have to set records here. You can just have a cyclical upturn and do very well. We’re selective, so we don’t want all of it! 

How do you tackle that?

We don’t want a hold over the defensive consumer stuff – so your Nestles, your Reckitt Benckiser’s – these are traded like bonds and are pretty expensive and slow-growers. The kind of stuff we’ve wanted are beaten-up industrials – so, think about the manufacturing base of Europe. There’s a lot of machine tools, a lot of exports into the emerging world, and they’ve done very well. But then also, the financials.