Equity valuations

Time to revisit equity market valuations. At ECP, we recognize that valuations may not dictate short-term market moves, but they remain a key driver of long-term investment returns.

The picture is clear: the U.S. market, fueled by U.S. exceptionalism, is trading at the highest valuation levels and well above its historical range. Other regions also look elevated but remain less stretched compared to history.

Europe now trades at a 37% discount to the U.S., wider than the 27% gap in February 2022 at the start of Russia’s invasion of Ukraine. Within Europe, some pockets still look attractive — such as the German MDAX, where we are also invested in our European Value Fund with names like Kion, Sixt or Jost Werke.