Philip Gibbs and Guy de Blonay, Jupiter’s financial fund managers, have both sold a large amount of their bank holdings and moved into cash.
Within the £752m Jupiter Financial Opportunities fund, de Blonay and Gibbs have reduced their exposure to banks from 48 per cent at the end of April to 31 per cent at the end of June. Cash went from 7 per cent to 25 per cent.
“Global banks in particular are likely to see divergent performances with the sovereign debt crisis overshadowing Europe’s banks. We are cautious about undercapitalised banks in the region, including the UK, preferring businesses in relatively safe-haven economies of Switzerland, Sweden, Germany and Norway,” the duo says.
In the long term, de Blonay and Gibbs are monitoring data and valuations for the opportunity to increase exposure to key emerging markets. In these economies, they say, public and private sector balance sheets are healthy and financial services have not penetrated the economy to the same extent as in the developed world. They predict once the current inflationary cycle turns, healthy loan growth in those markets will lead to solid stock price returns.
Within the £88m Jupiter International Financials fund, Gibbs reduced the allocation to banks from 39 per cent to 16 per cent. His exposure to real estate fell from 15 per cent to 11 per cent, while his exposure to fixed interest rose from 8 per cent to 11 per cent.
Nearly 58 per cent of the Jupiter Internationals Financial fund’s portfolio is now invested in cash, up from 26 per cent at the end of April.
“We hold a significant cash balance in safe-haven currencies such as the Swiss franc and are avoiding businesses exposed to Europe’s debt problems. The portfolio’s largest holding is in a high yielding Barclays corporate bond,” Gibbs says.
“In equities, we hold companies geared towards growth in the Far East, most notably in Hong Kong which is being supported by low rates in the US.”
The Jupiter Financial Opportunities fund’s exposure to life insurance also dropped from 11 per cent to 9 per cent. Holdings in financial services went up from 18 per cent to 20 per cent over the same time period.
Europe accounted for 36 per cent of the fund’s portfolio at the end of April, 41 per cent at the end of May and 34 per cent at the end of June.
Asia Pacific excluding Japan was 13 per cent at the end of April and is now 7 per cent, while eastern Europe used to be 9 per cent and is now 6 per cent.
In the Jupiter International Financials fund, exposure to the UK is down from 24 per cent to 18 per cent, the Hong Kong and China weighting has declined from 17 per cent to 12 per cent and the US position has gone down from 19 per cent to 6 per cent.