Looking for places where the risk/reward scenario is most attractive? Top fund manager David Herro says Europe is the place to focus.

Herro tells Morningstar that while some places in Europe are in economic distress, others are growing acceptable rates. “But because there is this perception that Europe is going into a macroeconomic slowdown, many businesses that are based in Europe seem to be selling at extremely reasonable valuations, despite the fact that these businesses have exposure to the whole world in its entirety,” he says. “They are not just European companies; they are based in Europe, but they don’t just sell their products or earn profits in Europe. And this provides us with a very exploitable opportunity.” Herro also talks about why the risk/reward scenarios aren’t as attractive in Japan and emerging markets, and he discusses what he says is the biggest current risk to markets.