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Multi-managers head for Europe exit

Multi-managers are cutting their exposure to Europe amid concerns that the European debt crisis is worsening.

Cazenove head of multi-manager Marcus Brookes says interest rate rises in Germany could have a negative impact on other European economies.

He says: “There is a worry at the European Central Bank that Germany has the potential to overheat, so it is raising interest rates there. That may well weaken the peripheral countries and might kick off another leg of the European debt crisis.”

Brookes has been reducing exposure to the euro and European equities. He says: “We bought an ETF that hedges out of euros and puts that risk into dollars to make sure we are insulated and we do not give away too much of our return if the euro weakens. We have sold down the European equity funds that have got exposure to industrial and cyclical-type names and put that money into US equities. We were two-thirds weighted to Europe relative to the benchmark at the beginning of the year, with our maximum underweight being 50 per cent. We are now getting down to the maximum underweight in Europe.”

Thames River multi-manager Rob Burdett says: “We are trimming our exposure to Europe to less than 1 per cent in the equity and bond funds and by more than 1 per cent in the equities funds and moving it into UK equities. We are a bit worried about the second bailout in Greece.”

But Aberdeen Asset management head of global equities Stephen Docherty says: “We focus on businesses rather than macro-economics because nobody knows what will happen. Europe is not the only area that has a sovereign debt issue.”


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