)
After China, Brazil and US funds, the mutual fund industry is now offering Europe-based funds to investors.
The European economy is still not out of the blue but market experts believe that sooner or later the region will overcome the problems. According to them, investments in European markets at current juncture may prove a better bet for investors who are looking for diversification outside the Indian market.
Religare Invesco, JP Morgan and Deutsche AMC have come up their Europe offerings in recent days. Though domestic investors' interest in the equity market is yet to revive, it is too early to say whether such foreign market opportunities will see traction among investors.
In one of the presentations, Religare Invesco outlines that more than a third of Fortune Global 500 companies, or 160 to be precise, are from Europe. Further, 32 of top 100 global brands too are from Europe.
Industry experts say that number of sectors within Europe are at low valuations relative to history and headwinds on corporate earnings should start to fade.
Out of the top 11 sectors, barring Consumer Goods, all are currently trading at a discount to their long term average cycle price to earning ratio.
Consumer Goods are at a premium of 42% compared to the long term P/E. However, sectors like Financials, Utilities, Oil & Gas and Telecoms are at a huge discount of anywhere between 30 and 55%.
For that matter, even sectors like Health Care and Technologies (which are at a huge premium in India) are available at a discount of 7 to 10%.
Indian fund managers have been suggesting that investors should enter markets at lower PE and exit at higher PE. But, the case so far has been just the opposite in India. Investors who had invested at PE valuation of over 17 exited at around 13-15.
