Europe’s Comeback

• Stefan Hirter
  Head of Distribution German Speaking Switzerland & Liechtenstein
  Alken Fund

Those who do not rely on passive strategies in this environment must adopt a consistently fundamental, highly active style and invest free from benchmark constraints. The focus is on identifying undervalued, often overlooked companies whose long-term potential the market has yet to fully appreciate. Three points are crucial for this: assessing sustainable earning power, understanding structural trends, and having patience with a long-term investment horizon. Short-term market fluctuations should be consciously disregarded.

Optimistic Outlook

At the sector level, industrials, communications, and IT stocks are currently attractive, as they are significantly underweighted in the benchmark. Financial stocks, on the other hand, are less in vogue. Given the excellent prospects, small caps are strongly preferred at present. Despite ongoing market volatility, one can remain optimistic about the future: this year will certainly not be an easy one for the markets at large, but rather a year for well-managed companies and those who select them carefully. Structural trends such as AI, rising global productivity, and the investment cycle in Europe create an environment where active stock picking continues to hold a clear advantage. The rise of AI marks the beginning of a structural efficiency boost that will support corporate profits worldwide and is increasingly impacting Europe.

Attractive Environment for European Companies

At the same time, Europe is experiencing a significant investment surge after years of restraint. Programmes already approved, amounting to around €1.5 trillion, are being channelled into infrastructure, digitalisation, energy supply, and mobility. These measures create an exceptionally attractive environment for European companies – especially smaller and medium-sized, innovation-driven firms that benefit from structural trends.

Europe appears significantly more attractive not only due to fiscal stimulus but also because of its comparatively moderate valuations and lower market concentration than in the US. While US indices are increasingly dominated by a small group of large technology companies, presenting considerable cluster risks, European equity markets offer broader, more diversified opportunities.

Conclusion

With Alken Fund’s strategies, investors are excellently positioned in Europe. Active management and the deliberate assumption of risk add value and have generated alpha in almost every calendar year since the strategies were launched. Various awards from Citywire underscore this impressive performance.