Why you shouldn’t close your EU investments

There have been financial crises all across Europe in the last few years and many with European investments may be tempted to call time on them and take the easy way out: Brexit them

However, it may not be prudent to call time on your investments just yet and experts such as Invest.com suggest there are opportunities for those willing to ride out the storm as currently invested funds have returned respectable percentages of late – 23% over the last three years.

Certain industry sectors will benefit from the Brexit fall out such as healthcare firms and oil companies who prosper in times where the dollar is stronger, this is scarcely breaking investment news but sometimes the obvious can help. Multinational firms such as Nestle and consumer giant Henkel are also safe in the current market but the weaker EU economies could be cause for concern.

The banking sector in particular is very worrying as there is little in place to prevent, or stand a European recession. There are prime concerns that the UK leaving the EU could spark a full European recession that too many nations simply aren’t ready for and concerns have been voiced as to what can be done to prevent this worst case scenario.

As far as multinational companies are concerned, they should remain safe no matter the outcome as certain brands and recognisable names will prosper no matter the financial climate. Nestle will prosper thanks to its brand image, heritage and marketing – people will always seek a specific product.

Another company that has seen strong returns in Europe is drinks business Campari. The company is still 51% owned by the founding family and they have expanded their range from two products to more than 50 by acquiring other brands in a major programme since 1995. Although European sales only make up 19% of Campari’s sales, they can rely on those sales for years to come no matter than situation in Europe.

The average £1,000 investment in Europe returned £1,230 over the last three years which isn’t a huge increase but it is a positive nonetheless. Specific companies saw more returns than others, which is to be expected, especially Schroder which saw a £1,403 return on £1,000 investment – very impressive given the climate over the period.

Share prices in European businesses are actually on the up but, to net any real return from your investment, you will likely need to investigate the slightly riskier options rather than playing with safe stocks.  Whilst this isn’t quite  like choosing which game of online bingo to play with, the stock market has always favoured the brave on terms of large returns but it is still wise to exercise caution – take French insurer AXA as an example, their share price fell by 25% earlier this year which looks very tempting but the chances of recovering that loss are slim.

In brief, the best way to maximise your return investing in Europe is look to businesses with a strong brand, unique products and the staying power to remain a force in their industry throughout the potential European recession.

Ben Lobel

Ben Lobel

Ben Lobel was the editor of SmallBusiness.co.uk from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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