Bargains lure US funds to Europe

[NEW YORK] AMERICAN mutual funds are scouring Europe for bargains, snapping up Dutch oil drillers, French drugmakers and Swiss food producers on speculation that the region's rally is just beginning as the US bull market ages.

Oliver Pursche, a Suffern, New York-based manager beating 97 per cent of rivals in 2013, bought Total SA and Royal Dutch Shell for their relatively high dividends and low valuations relative to peers. Sanofi in Paris is among about 25 new stocks added by Timothy Ghriskey's Solaris Asset Management in Bedford Hills, New York. Overseas companies that get most of their sales from within the US are favourites of Paul Zemsky, the head of asset allocation at ING Investment Management.

The allure of European stocks is drawing managers with almost US$5 trillion under management after US$13 trillion was added to US equity prices since March 2009 and the Standard & Poor's 500 Index capped its best stretch of gains since 2004. While investors predict the Federal Reserve will cut stimulus in March, they are betting the European Central Bank will keep economic measures for longer. Europe's economy is forecast to return to growth next year.