Trustnet Magazine Issue 12 November 2015 | Page 16

INVESTMENT STRATEGY

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interest rates, saw shares soar in
the subsequent years.
To put this into perspective,
since the nadir of the crisis in
March 2009 to the end of October
2015, the FTSE 100 has rallied by
111.83 per cent while the S&P 500
is up 188.11 per cent.
The upshot is that thousands of
investors are now placing their
bets on Europe in the hope it
will deliver similarly spectacular
returns.
Much like in the rest of the
world, markets on the continent
endured a harsh sell-off over
the summer but the QE strategy
appears to be making some tracks,
with the eurozone settling into
steady, albeit slow, growth.
While inflation is hovering
around zero and third quarter
economic growth numbers
for the eurozone are yet to be

PERFORMANCE OF INDICES SINCE FINANCIAL CRISIS
200%

S&P 500 (188.11%)

175%

FTSE 100 (111.83%)

150%
125%
100%
75%
50%
25%
0%
Sep

Mar 15

Sep

Mar 14

Sep

Mar 13

Sep

Mar 12

Sep

Sep

-25%
Mar 11

Last month the ECB said it would
“re-examine” the QE programme

in December – this was widely
interpreted to mean it will ramp
up the process on the back of
concerns the recovery will be
dampened by challenges brought
on by China’s slowing economy.
QE was introduced in the UK
and the US in the wake of the
financial crisis to stop their
respective economies grinding
to a halt. This backdrop of loose
money, coupled with ultra-low

Mar 10

RAMPING UP

RIGHT NOW THE BIG
PULL FOR RETAIL
INVESTORS IS THE
ULTRA-LOOSE
MONETARY POLICY THE
CONTINENT IS ENJOYING

Sep

With the economic recovery gathering pace and the
promise of further QE to come, Phil Scott says things
are beginning to look up for European equities

D

espite the number of welldocumented economic
headwinds facing Europe,
the amount of cash flooding into
the region has soared during 2015
and the flow is showing no signs of
letting up.
The backdrop of paltry
inflation, sluggish economic
growth and even the threat of
Greece exiting the eurozone
earlier this year seem to have
had zero impact on investor
sentiment.
The latest numbers from the
Investment Association show that
from the start of the year to the
end of September, almost £2.6bn
has been squirreled away in IA
Europe (ex UK) funds, marking a
rise of more than 300 per cent on
the £638m invested throughout
the whole of 2014.
The trade body’s figures show
that in September alone, IA
Europe (ex UK) notched up net
retail sales of £294m, making it
the third most popular sector that
month.
Right now the big pull for
retail investors is the ultra-loose
monetary policy the continent is
enjoying. While the region’s key
interest rate stands at a negligible
0.05 per cent, in March this year
the European Central Bank (ECB)
unleashed a €1.1trn, or €60bn a
month, quantitative easing (QE)
programme in a bid to boost
growth.

Mar 09

LIGHT AT THE
END OF THE
TUNNEL

EUROPE

Source: FE Analytics

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