News that the economies of 17 eurozone countries grew by 0.8% in the first quarter of 2011 demonstrates that it is not all bad news in Europe.
This was an improvement compared to the 0.3% economic growth experienced in the previous quarter.
Germany helped to deliver these strong economic figures for its neighbours, with quarterly growth of 1.5% in the first three months of the year.
However, Portugal slid into recession with a second consecutive quarter of economic contraction.
Whilst overall levels of economic growth in the eurozone may not be quite as strong for the remainder of the year, this is positive news for a region where the focus has again shifted to sovereign debt concerns.
Economic activity and equity market results are not always closely correlated, but assuming these latest figures do spell good news for European companies (and UK companies who trade in the eurozone), then it once again justifies taking a selective approach to European equity investment.
It is for this reason that we tend to shun the passive investment option for Europe, instead seeking to select active fund managers who manage their funds with a high active share.
Investing in European companies, particularly with their reasonable valuations, can make sense for investors as long as it is possible to avoid too much exposure to those economies who face real financial difficulties.
By using the active management approach it should be possible for the manager to steer clear of the PIIGS and instead invest in companies who should benefit from strong eurozone growth prospects for the future.
Photo credit: Flickr/HaPe_Gera
