Investors may want to rethink their focus on major global players and put more money into funds that invest in smaller companies, The Wall Street Journal's
Murray Coleman writes. Coleman interviewed Mark Luschini
, chief investment officer at Janney Capital Management
, whom he quoted as saying, "It makes sense now for investors with a large-cap bias to tilt more of their portfolios to smaller and more nimble companies that are well-suited to take advantage of Europe's recovery."
Confidence in the eurozone is increasing, with net flows of European focused mutual funds and ETFs moving up by $12 billion from July 2012 through August, Coleman writes, adding that almost 74 percent of net flows into European stock funds went into large-cap stocks.
The proof is in the pudding, however, Coleman says. Based on the next 12 months' expected earnings, the price/earnings ratio for a typical European large-cap stock trades near 12 contrasted to a forward PE ratio of 14 for small cap European stocks.
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