Argonaut fund manager Barry Norris has reduced his exposure to energy companies in light of an expected slowdown in global economic growth.
The £207m Argonaut European Alpha fund was 5 per cent overweight in energy, which Norris has reduced to a neutral weighting over the last few weeks.
Norris (pictured) says: “We think the upside to energy costs is likely to be capped by weaker economic growth globallly and the development of shale gas.”
Norris sold a 1.5 per cent position in Norway-based Aker, which provides oilfield products, systems and services for customers in the oil and gas industry.
He says: “The stock had done well, making 45 per cent for us. But looking at the areas the company is in, I do not see how it could continue to surprise positively from there.”
Norris says there will still be some opportunities in the sector however.
He says: “We have sold companies that we think are not necessarily the highest-quality companies in the sector. The premium you are paying for the better quality companies in Europe at the moment is abnormally low, especially as the lower-quality companies are not going to grow profits and the higher-quality companies are.”
Equilibrium Asset Management investment manager Mike Deverell says: “Anything that is commodity-based is going to have a link to economic growth, which is going to weaken over the next year or so.”