Dan Kemp: The portfolio management team at Morningstar has been doing some research into European equity markets following the declines that we've seen over this summer. And what that work has shown us is that while some countries appear to be cheaper than others, that's really due to the underlying industry mix rather than anything at the country level.
So, for example, Italy, which looks particularly attractive, is really driven by its exposure to energy, financial services and utility companies, all of which are out of favour.
There are several conclusions we can draw from this research, but really the most important one is the way that we look at European funds. Really when you are looking at that underlying mix of industries, it favours the ability of active managers to find the best opportunities rather than using an index approach and that's probably the reason why active managers have done so well in Europe over the years.
