A major Wall Street firm is encouraging investors to start looking for opportunities in Europe, even as uncertainty surrounding Brexit and upcoming elections in the region linger.
BlackRock, which formally upgraded its rating on European assets to neutral from underweight, believes this could be a 'contrarian' way for investors to profit this year.
"We think a lot of the risk is starting to be priced in. So, you're actually being paid a nice premium," said Terry Simpson, the firm's multi-asset investment strategist this week on CNBC's "Futures Now."
According to Simpson, BlackRock is "actually starting to inch back in... This is still a very undervalued market relative to the United States."
Simpson is telling clients to seriously consider investing in overseas developed markets. Instead of just relying on recent U.S. gains which have been chiefly driven by multiple expansion, he says investors should rotate back into Europe and put money to work in Japan.
"We look at the performance of Europe and Japan absolute relative to the U.S. over the last month to three months. That's actually been a really good trade," he said.
In just the early days of 2017, the FTSE 100 is up nearly a full percentage point, building on last year's double digit percentage returns.