Investment Strategy 12 January 2016

2016: Europe is at the heart of our investments

2016: Europe is at the heart of our investments

After a year marked by central bank policy, performance in 2016 should be shaped by growth and inflation criteria. If the first week of 2016 is a good guide, resurging volatility in particular will continue to rattle investors. In such a shifting environment, a flexible and selective approach to investing is recommended and Europe is clearly the most attractive region.

On January 12, Edmond de Rothschild Asset Management hosted its traditional Investment Strategy presentation for investors in the prestigious Automobile Club. Along with Philippe Uzan, head of Long Only Investments, our teams took part in discussions at two round tables led by Stéphane Soumier, editor-in-chief of Good Morning Business on the BFM Business channel.

You can meet the teams at Edmond de Rothschild Asset Management (France) from January 12-29 2016*. 

Key points

  • Has Europe fulfilled all its promise?

    ​Improving financial conditions, a gradual revival in consumer confidence, less budgetary rigour, lower company defaults and cleaned-up bank balance sheets have helped usher in a more favourable business climate in Europe.

    On the monetary front, the European Central Bank should continue to play an active role as watchdog. Its accommodating stance could be stepped up in coming months and it has already announced that its asset purchase programme is to be extended beyond September 2016.

    European equity markets were not immune from volatility in 2015 but they benefit today from a favourable environment and healthy companies. In addition, the uncoupling of US and European monetary policy favours Europe which also boasts sound fundamentals.

    Against this backdrop, and after four years of rising markets, are European stock valuations still attractive? Which themes and sectors should we focus on in 2016?

  • US, Emerging markets and Japan: which assets should we be focusing on?

    ​In December, the Fed raised its benchmark rate for the first time since in 10 years. The monetary policy horizon is now clear and many US indicators suggest that the economy there is doing well. In the US (as in Japan), household consumption will be the main growth driver in 2016. Will this growth be robust? Which segments offer value?

    In recent months, China has only had to sneeze for the rest of the world to catch cold. Despite recurrent turbulence on China’s stock markets, the country’s economic policy has been radically overhauled: restrictive measures have been lifted and monetary stimulus via interest rates and liquidity introduced. How efficient will this prove in 2016?

    For the overall emerging market zone, the worst of the correction was perhaps in 2015 and the economic picture, albeit fragile, should stabilise, helping some assets to stage a comeback after a difficult period. Should we move back into emerging markets in 2016? In such a rapidly changing environment, stock selection really comes into its own.

  • Our main investment convictions for 2016

    ​Equities - overweight on the asset class 

    • We prefer European equities with a preference for stocks exposed to domestic growth and special situations
    • We are focusing on the value approach
    • We will no longer steer clear of emerging markets but be selective
    • Favourite investment themes: M&A in Europe and themes like Big Data


    • We prefer Euro high yield bonds, subordinated financial debt and convertibles
    • We remain cautious on duration and prefer peripheral country debt


    • Limited upside for the US dollar
    • The Yen and certain emerging country currencies look interesting

Learn more

Need more information?

Contact us

Edmond de Rothschild Asset Management (France)
47 rue du Faubourg Saint-Honoré
75401 Cedex 08 Paris

+ 33 1 40 17 25 25
*Our road shows in France and Europe: Milan 1 December, Paris – 12 January, Nantes – 15 January, Lyons – 18 January, Brussels – 18 January, Luxembourg – 19 January, Nice – 20 January, Monaco – 21 January, Bordeaux - 22 January, Marseilles - 25 January, Strasbourg – 26 January, Geneva – 26 January, Lille – 28 January, Toulouse – 29 January, Madrid 2 February.

Value: discounted stocks.
Subordinated debt: debt which is repaid after other creditors have been reimbursed. In return for higher risk, subordinated debt securities, which are often without a fixed maturity, benefit from a higher coupon than senior bonds.
High Yield: speculative debt securities with a higher risk of issuer default.

January 12 2016. Non-binding document.This document is for information only.
The data, comments and analysis in this bulletin reflect the opinion of Edmond de Rothschild Asset Management (France) and its affiliates with respect to the markets and their trends, their regulation and tax treatment, on the basis of its own expertise, economic analysis and information currently known to it. However, they shall not under any circumstances be construed as comprising any sort of undertaking or guarantee whatsoever on the part of Edmond de Rothschild Asset Management (France). Potential investors should consult their service provider or advisor and exercise their own judgement independently of Edmond de Rothschild Asset Management on the risks inherent to each investment and its suitability to their own personal and financial circumstances. To this end, investors must acquaint themselves with the key investor information document (KIID) that is provided before any subscription and available at or on request from the head office of Edmond de Rothschild Asset Management (France).