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FXstreet.com (Barcelona) - Paras Anand, Head of Pan-European Equities at Fidelity Worldwide Investment believes that while headlines coming out of Europe from a macro-economic perspective will remain un-supportive in 2013, active stock pickers in Europe have the opportunity to continue to generate good returns for investors.

In the first of a series of quarterly updates, he focuses on some of the themes which could dominate in the year ahead including M&A, Lofty of Nifty and Active vs Passive.

He begins by noting that M&A activity fell in 2012, due to the highly uncertain macro environment, but while uncertainty remains, he feels it is clear that the worst outcomes are less likely and hence forth the focus will shift back to capital allocation, especially in the context of what appears to be a favourable borrowing environment.

Next, he feels that the better structured and well managed businesses will be the ones that can buck the broader economic environment and, in this context, the gap (expressed by valuation) between those evidenced as winners and the remainder will continue to grow.

Finally, Anand believes that passive approaches are essentially feeder strategies that can only work because of the existence of active investors attempting to arbitrage the differences between prices and underlying fundamentals. He writes, "In essence, they require a significant majority of market participants not to be passive. Therein lies the self-defeating nature of the boom in passive strategies coincident with a protracted allocation away from equities; it has led to a breakdown in diversity. In such an environment, active investors have the scope to flourish."

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