Financial services firm Fortrend Securities has added European exposure to its clients' portfolios despite concerns several countries in the region may default amid high fiscal deficits and ballooning public debt.
The Melbourne-based company's model portfolio invested in an iShares Europe exchange-traded fund (ETF) that has a large-cap focus but avoids United Kingdom stocks.
"You still have some pretty big companies that are still making some pretty good money, and as we said a couple of years ago, a crisis is a terrible thing to waste," Fortrend chief executive Joe Forster said.
Economic activity hasn't slowed in Europe, but rather risk perception of the region has increased.
Eurozone leaders last month banded together to create a $1.1 trillion stabilisation fund to contain the debt crisis after Greece's $160 billion bailout failed to stem market panic.
"It's the risk that has increased in Europe, it's the uncertainty, but the growth rates haven't come down," Forster said.
"I'm not seeing anyone saying that demand from Germany, France and Spain ... is slowing down. I'm not hearing anyone say that."
He said European companies were trading at a discount to their United States peers, had a high dividend yield and also had significant earnings coming from outside Europe.
Fortrend also added several cyclical US stocks to its model portfolios.
"You keep hearing this bad news about what's going on in Europe and don't mistake it - the US earnings this quarter were very good," Forster said.
"We are seeing some very good economic activity as we recover from last year's disaster and it's really coming from demand in the BRICs (Brazil, Russia, India and China] and Asia."
Multinational industrial company 3M, technology firm Cisco and real estate investment trust SL Green were among additions, while Disney and Morgan Stanley were sold.
Fortrend's model portfolio has 10 stocks that are equally weighted and rebalanced regularly.
