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Eye on Europe – U.S. downturn a factor

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With the economy cooling in the U.S. and growing in Europe, managers of nonprofit portfolios increasingly are looking at investments throughout the continent, Institutional Investor magazine reported Feb. 11.

Attracting the nonprofit managers are potential robust returns in countries throughout Europe, the chance to diversify their portfolios, a single currency and the possibility that the European economy soon could outpace that of the U.S. for the first time in a decade, the magazine said in a forum prepared by Foundation & Endowment Money Management.

The forum featured a panel of investment advisers.

Heydon Traub, head of international equity at State Street Global Investors, said that foundations and endowments “should not seek Europe as a risky source of higher return, but as an investment alternative that may provide valuable diversification.”

Richard Pell, chief investment officer at Julius Baer & Co., said Europe “may provide to be a relatively safety haven” because valuations are somewhat lower there, economic growth and earnings should be superior there for the next few years and “some currency diversification is likely to be beneficial.”

And James Hal McMath, non-U.S. equity consultant at Capital Resource Advisors, said that fiscal reform in the biggest European economics “is gathering momentum…The outlook relative to the U.S. should be favorable going forward.”

For full story, go to Institutional Investor.

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