Barry Norris, manager of the Neptune European Opportunities fund, says: “European equities are now yielding just less than government bonds. If you measure the valuations of equities using the P/E ratio then Europe is cheaper than the US and is the cheapest region in the developed world. It is on 14x earnings whereas the S&P 500 is on 18x and the Nasdaq is on 31x.”Norris, whose fund was the second best performing in the sector in the 12 months to October 11, with a return of 22.36% according to Standard & Poor’s, has about a quarter of his fund in energy-related stocks. He argues the rising global demand for oil and the lack of investment in new production will bolster the price of crude. It is likely to stay higher than the forecast price of $26 or $27 a barrel for longer than expected. Among the energy stocks held by Neptune European Opportunities is Maurel et Prom. “It has a market cap of E1bn [£690m] and has been fairly aggressive. It has a 55% stake in the largest oil find in the last 20 years in the French Congo. It is estimated there are 250 million barrels of oil in the field but by buying Maurel et Prom you are paying $4 a barrel for its reserves.” Norris adds that the shipping industry is struggling to cope with the extra capacity required. He is also investing in shipping companies such as AP Moeller-Maersk to benefit from China’s strong demand for raw materials and exports of manufactured goods. The European Union will benefit, says Norris, from the entry of 10 extra countries last May. They have increased its population by 10% and GDP by 5%. Dino Fuschillo, manager of the Martin Currie European fund, also says European stocks generally look cheap. “Lots of stocks are on 5x to 10x P/Es with dividend yields of 5%. You only need a 3% growth in the share price and you have a total return of 8%.