James Burns has dropped Alexander Darwall’s Jupiter European Opportunities trust from the £26.2m Smith & Williamson MM Global Investment fund as he adjusts the portfolio’s European exposure.
Burns sold out of Darwall’s £240.1m investment trust, which the fund has owned for about 12 years, at the end of August and has been a building up a position in John Bennett’s £95.3m Henderson European Focus trust.
The manager says the decision to sell the Jupiter European Opportunities trust is a short-term tactical move, based on the fund’s high gearing, expensive portfolio, narrowing discount and its exposure to the UK, which stands at more than 40 per cent.
“I just wanted to have slightly more pure European exposure on a cheaper basis and on a wider discount,” Burns says. “[Henderson European Focus] is 100 per cent Europe, the portfolio is cheaper and it’s not got as much gearing.
“If something goes wrong in Europe in the next couple of weeks and Europe crashes, then the portfolio is not as geared and is not as expensive so it might hold up better. If the markets do go ahead, it’s cheaper and it’s all Europe so there may be a bit of a boost.”
CandidMoney.com founder Justin Modray says: “The recent announcement from the European Central Bank on plans to stave off the sovereign debt crisis has been a boost for Europe, but there are still a number of long-term question on whether the eurozone can hold itself together. If I were looking at European funds now I would still focus on making a small bet on a defensive fund in the sector.”
Skerritt Consultants head of investments Andy Merricks says: “We have started to look at Europe again as the Armageddon scenario appears to be diminishing. There appears to be a lot of value across a number of sectors in Europe.”