Where investors are flocking in Europe

Millions of people will be holidaying in Europe over the summer months and giving a much-needed boost to airlines, hotels and other businesses. Spending by international visitors in the region is expected to soar 11% to $838 billion, according to a study by the World Travel and Tourism Council*.

However, it comes at a time when protestors are taking to the streets in dozens of cities across Europe against the tourism industry. On June 15, thousands marched in a wave of coordinated demonstrations across Southern Europe against "touristification". From Barcelona and Palma de Mallorca to Lisbon, Genoa, Venice and Ibiza, protestors highlighted how mass tourism is driving up housing costs, spawning precarious low‑wage jobs, straining local infrastructure and eroding cultural identity. These actions signal mounting frustration with the prioritisation of tourist destinations over long‑time communities.

France is clearly the most popular nation as it attracts over 81 million visitors every year, according to a report by insurance company AXA Schengen. However, it’s followed by Spain, Italy and Germany each seeing more than 25 million tourists each year. The rest of the list includes Austria, Ukraine, Greece, Poland and Portugal**.

Here we take a look at the region’s most popular countries and the investment funds embracing them that are worth considering.

Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.

France

France isn’t only popular with visitors sampling the cultural delights of the Eiffel Tower and the Champs-Élysées, but also investors. Economic growth has proved to be resilient but remains weak, according to the most recent report from the Organisation for Economic Co-operation and Development.

France is the largest country exposure in the Comgest Growth Europe ex UK fund***, co-managed by Franz Weis, James Hanford and Denis Callioni. This is a high-conviction portfolio that invests in high-quality, long-term European growth companies that are headquartered – or carrying out most of their activities – in this region.

L'Oreal, the French personal care business, is one of the largest stocks in the fund, accounting for 5% of assets under management***. We like how the portfolio managers also work as analysts, while most of the staff – including those not in the investment teams – have a stake in the business.

Spain

With its sun-drenched beaches, Spain has long been a favourite haunt for both international visitors and those looking to buy holiday homes. Its popularity could see the travel and tourism sector hit an all-time high of €260.5 billion to GDP this year*.

Spain is one of the highest country allocations of the Liontrust European Dynamic fund, which is a concentrated portfolio of 30 to 40 holdings. Two Spanish banks are among its 10 largest individual positions – Banco Santander and CaixaBank – each of which accounts for 3.4% of assets under management***. We’ve been impressed by the combination of this fund’s management, rigorous process and collaborative approach, which has helped deliver stellar long-term performance.

Italy

What’s not to love about Italy? Whether it’s the history of Rome, the charming canals of Venice or the bustling street markets of Florence, there’s something for everyone. The country has also weathered recent crises well, aided by a strong fiscal policy response, enhanced competitiveness and improved banking sector health.

Investors wanting exposure to this country could find what they’re looking for in the Montanaro European Income fund, which is managed by Alex Magni and George Cooke. This partnership focuses on small and medium-sized businesses across the region, each of which offers an attractive dividend yield – or the potential for dividend growth.

Italy has the largest country allocation in the portfolio and accounts for 21% of assets under management, according to the latest factsheet. Significant Italian companies in the fund include Terna-Rete, the country’s main electricity transmission system operator, and Technogym, a sports equipment provider^.

Germany

The fourth most visited European country is an economic powerhouse with its $4.5 billion GDP being the largest in the region. However, the economy has slightly contracted for the past two years and is expected to broadly stagnate during 2025, according to the European Commission^^.

Germany has the largest country allocation of 19.7% in the BlackRock European Dynamic fund, according to the latest factsheet***. This fund, which invests in businesses of all sizes across Europe, is relatively concentrated with around 50 stocks. Those favoured included undervalued companies or those with growth potential.

MTU Aero Engines, a German aircraft engine manufacturer, is one of the largest individual holdings in the portfolio, as well as banking institution Commerzbank***. We think this fund is one of the best in a competitive sector, with a genuinely flexible approach and a willingness from the team to constantly refine and enhance its process.

*Source: Reuters, 29 May 2025
**Source: AXA Schengen, top 10 most visited countries in Europe
***Source: fund factsheet, 31 May 2025
^Source: fund factsheet, 30 April 2025
^^Source: European Commission, 19 May 2025

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.