Old fashioned long-term attitudes will see eurozone investors through the debt crisis, new report suggests

A diverse and balanced portfolio is needed in the current market with investors prepared to take an old fashioned and long-term approach, says a new eurozone fiscal crisis report published by Investment International.

In the report Mark Richards, head of sales at Barclays Wealth International and Barclays Wealth Intermediaries, says that there is a crisis of confidence in the eurozone with polarised views on how to deal with the problem.

Mr Richards says: ‘We have a strong belief that there are opportunities in equities that are generally underpriced, however, the downside of equities is that they need to be seen as a long-term investment and your capital is at risk’.

This is in line with the overall strategy at Barclays Wealth which is to restore confidence amongst investors and encourage them to see their portfolios over the longer term. Mr Richards says: ‘Concerns about Greece are likely to persist in the short-term but a balanced portfolio can see the investors beyond this.’ 

He adds: ‘The key is balance and diversity, looking at equities and secure government stocks. It is not about short term wins and gains, but about going steadily forward. This may not offer the highest possible return and it might be regarded as an old fashioned approach, but it is one that is needed in this very modern crisis.’

The report also looks at how the eurozone’s sluggish competitiveness could be a threat to the European Monetary System and impact on wider global recovery and emerging market currencies.

Michael Sneyd, currency economist at Barclays Wealth International, points out that the full brunt of austerity policies have not yet been felt in many countries and the euro could be vulnerable for some time to come.  

Overall he expects that the euro area will come through these difficulties though, saying: ‘Even if Greece does not turn around in time, it may be offered more support by other European Union members if it is on the right path. However, we do expect that the euro area’s sluggish growth will cause the euro to weaken over the next year or two, especially against other European currencies such as Sterling and the Swedish krona. We do not expect the euro to weaken much against the US dollar though.’

The detailed report also gives a blow by blow account of how the eurozone crisis developed and is available to download free (Euro crisis report).