Invesco Perpetual is remaining defensively positioned on stocks for the moment despite some recent market rallies and is staying underweight of financial stocks, particularly in the case of banks.

“While the enormous debt overhang, the subsequent length and scale of the corporate and consumer deleveraging process and the ongoing problems in the banking system persist, it is hard to conclude that we are in the throes of a sustained equity market bull phase,” said Luke Stellini, European product director, in a note.

The Dow Jones Euro STOXX 50 benchmark of leading European shares has plunged by 44.4 per cent in the 12 months to 30 March, when measured in euros. Over the last month, it has risen by about 2.6 per cent.

Invesco is treating any rallies with caution, given the continued uncertainties, Mr Stellini said.

On financials, he pointed that across the different retail funds of European equities run by Invesco, the portfolios were underweight financials from between -10.4 per cent to -12.8 when compared with their market benchmarks.