The EURO STOXX 50 crawled out of an 18% plunge less than two months into 2016 to close the year at +3.7%. EURUSD swung but gravitated towards parity. Surprisingly, most gains were made following a Brexit outcome that could spur further EU unraveling and a surprise Trump victory that has strained NATO relations.
Political uncertainty driven by rising regional populism, not to mention an unpredictable US administration, will continue to loom large in European markets, although recent whispers of a ECB rate hike signals improved economic confidence. Even in a year like 2016, silver linings could be found, with STOXX’s European Select Dividend 30 index posting almost +12%.
Whilst allocations are expected to be muted compared to fundamentally stronger economies elsewhere, it remains critically important to apply active management where political developments could produce divergent movements and new correlations.
The vast scale of a machine like BlackRock enables the American asset manager to overcome domestic champions and lead fund distribution in foreign markets like Europe. With an army of 13,000 employees, which includes 1,800 investment professionals and 135 investment teams in 30 countries, BlackRock is able to consistently scale its best practices across a shared common operating system and performance culture. Asia’s fund selection heads do not disagree, selecting BlackRock as this year’s Best Fund Provider – Europe Equity.