Investor confidence may be down at the moment, but things will get better. That was the upbeat message Franklin Templeton Investments delivered at its Outlook and Opportunities Forum and 48th annual meeting of Templeton Growth Fund Ltd. on Thursday in Toronto.

A panel of Franklin Templeton fund managers gave their thoughts on the issues affecting investor confidence including accounting scandals, poor corporate governance, and a lack of transparency in financial reporting.

“We’re already seeing better accounting reporting,” says Don Reed, president and CEO of Franklin Templeton Investments. “If you’re going to fly, isn’t it safest right after a hijacking? This is the same situation. It’s a good time to invest.”

Fred Pynn, executive vice president of Bissett Investment Management and portfolio manager of Bissett Canadian Equity Fund, said investors can expect the Canadian economy to continue growing. While international diversification remains an important consideration, it’s no longer a mandatory requirement for Canadians.

“Recently it’s been the smaller caps that are outperforming. We’re focusing on small caps, soft cyclical companies, and companies with global reach,” he says, citing Metro Inc., Magna International, and Manulife Financial as companies that fit that mold.

Terri Spath, portfolio manager for Franklin U.S. Large Cap Growth Fund and vice president of Franklin Advisers Inc., said that despite concerns about equity markets there are still opportunities to find quality investments in the United States.

“Every stock, everywhere, has been suffering. The U.S. economy is down and there’s a complete breakdown in investor confidence. It is a fact, though, that the economy is showing signs of stabilization. Corporate profits are accelerating. A good indicator of that is house sales are going through the roof,” she says.

Europe is also a place investors are encouraged to keep their eye on, says Don Reed who is also lead manager of the Templeton International Stock Fund. Corporate tax rates in Europe are set to go down, which means higher corporate earnings, and companies become more competitive as a result. Mergers and acquisitions in Europe have been at a fever pitch, says Reed.

“History is an excellent teacher. Look at Pearl Harbour, even the Gulf War, after those events the market recovered. This time is no different,” he says.