Nearly three quarters (71 per cent) of advisors intend to increase their client’s exposure to European equities in the next six months, according to a survey by BlackRock.

BlackRock’s survey revealed that 89 per cent of advisors see the importance of income and intend to change their clients’ exposure to equity income in the next six months, while 69 per cent of advisors are somewhat optimistic about the European economy over the next six months.

“European politics has dominated financial markets for the last two years but the tide is turning. As political stability has been recognised, financial markets became calmer and investors should be comforted.  Some European-headquartered companies have customers all over the world and yet are often available cheaper than US-headquartered companies with the same global customers, for example. Other European firms focus on domestic infrastructure customers whose demand is more resilient and again are attractively valued,” said Alice Gaskell, co-manager of the BlackRock European Continental Income fund.

“Despite this disconnect between politics and profits, many investors missed out on last year’s rising European markets. They are however now returning to Europe, and there are still many hidden gems to be found. In particular, we have found many gems in the mid-cap space where dividend forecasting by the market is weaker and where we can find above average sustainable yield and dividend growth. Mid-cap, French-headquartered electrical company Rexel, for example, makes over a third of its sales into North America, where construction is rebounding. The company has a dividend yield above 4 per cent, and is likely to grow its dividend as the US continues to recover,” said Gaskell.

BlackRock undertook its survey of 35 finance professionals to gauge attitudes towards their economic outlook and their clients’ attitudes towards investment.