Wealth Manager - Essential news for investment professionals

Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

RWC's Gambhir: European equity valuation dispersions at 30 year high

RWC's Gambhir: European equity valuation dispersions at 30 year high

RWC’s Ajay Gambhir says the dispersions in European equity valuations are at their highest level in 30 years, throwing up opportunities for long/short managers.

Gambhir, who runs the RWC European Absolute Alpha fund, said: ‘The dislocations in European equities have been so severe in the recent past that the opportunity for long/short investors, between sectors and stocks, is greater than it has been for at least five years. 

‘We can see several ways to take advantage today; the dispersion of valuations between European sectors is close to the highest level in three decades, excluding the TMT bubble; the spread of valuations within sectors is higher for the majority of sectors than six years ago before the financial crisis; and 60% of the Eurostoxx index of European stocks has dividend yields higher than the average European BBB corporate bond yield.’

He said although the market is cheap on average, there are many expensive stocks within it which present shorting opportunities. Gambhir is also backing European economic growth to continue improving, albeit with the caveat that it will be capped by continuing austerity, structural issues and ‘global headwinds from the Brics’.

Over one year the  RWC European Absolute Alpha fund has returned 14.02% compared to a City Alternative Ucits Long/Short sector average of 9.79%, both in sterling terms.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Related Fund Managers

Ajay Gambhir
Ajay Gambhir
25/51 in Alternative UCITS - Long/Short Equity (Performance over 3 years) Average Total Return: 24.93%
Citywire TV
Play Sarasin’s Boucher: why I like salmon with chocolate

Sarasin’s Boucher: why I like salmon with chocolate

Henry Boucher, manager of the £129 million Sarasin Food & Agriculture Opportunities fund, explains why he is gobbling up salmon and chocolate stocks.

Play Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Alibaba hype, the UK slowdown and opportunities in European sovereign bonds

Libby Ashby and leading wealth managers analyse what the Alibaba IPO hype means for Chinese equities, slowing growth of the UK economy and whether there’s anything left to play for in the European sovereign bond market.

Play Tesco, Japan and the rise of the central banker

Tesco, Japan and the rise of the central banker

 Libby Ashby and leading wealth managers scrutinise the food retail sector, Japan’s consumption tax hike and political risk in the markets.

Your Business: Cover Star Club

Veteran banker boosts Sanlam’s stockbroking team

Veteran banker boosts Sanlam’s stockbroking team

A veteran private banker has been recruited by Sanlam Private Investments to strengthen its advisory stockbroking team.

Wealth Manager on Twitter