“European small caps have been the best performing asset class in Europe over the past 10 years, recording a total return of more than 300%”, said Cordell. “As a consequence, there is not much value left in small caps.”
Investors would do better shifting their attention to large caps, Cordell said. “Valuations of large caps are at 30-year lows versus small caps.”
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Peripheral opportunities
Cordell especially identified peripheral Europe as an area where attractively priced large caps can be found. The stubbornly high unemployment figures in these countries actually shouldn’t discourage investors, as this is mainly a consequence of cost reductions by local companies, the fund manager said. “Corporate profitability goes up as costs are reduced.”
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