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Dollar exposure increases as more euro falls predicted

Multi-managers are increasing exposure to the dollar as they predict further falls in the euro.

The euro hit its lowest level against the dollar in 16 months on Thursday last week, when it fell to $1.28, a loss of 1.2 per cent on the day.

TM Darwin founder David Jane (pictured) has increased his exposure to US assets by 8 per cent to 30.5 from 22.5 per cent since November last year in the £8.5m TM Darwin multi-asset fund.

In contrast, he expects the euro to continue to be weak and has let exposure to European assets go down from 5.5 per cent to 4.5 per cent.

Jane says: “If the euro is to survive as a single bloc, markets will have to look on euro-den-ominated government bonds as an average of all European governments debt and tax revenues. Central bank guarantees of individual nations debt will lead to the devaluation of creditworthiness of the stronger nations.

“Alternatives to this solution are direct fiscal transfers to the poorer nations to help their deficits or quantitative easing. All these will result in a weaker euro.”

Cazenove head of multi-manager Marcus Brookes has built up his 2 per cent holding in European equities to 5 per cent since September in the £597.5m Cazenove multi-manager diversity fund. However, he has hedged out half the euro exposure to dollars using an ETF.

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