Potter, who with Robert Burdett makes up the firm’s multi-manager team, has maintained a heavy weighting in US and Japanese equities following a post-Lehman portfolio reshuffle. He says they are poised for a rally in the next two years.
He says: “In relative terms, our Japanese weighting is probably the highest it has been in the last five to 10 years. It is 12 per cent and the sector is 7 per cent and there are very few funds which are that overweight in Japan.
“While there are still some tie-ups with Japanese financials and Lehman, the valuations look very cheap. We are not out of the woods yet but Japan does look like a relatively good place to invest.”
Thames River’s holdings include the JO Hambro Japan select fund and Melchior’s Japan advantage fund and Potter says further exposure to Japan is being explored.
Potter says infrastructure, industry and blue-chip companies will drive growth in Japan, with financial stocks chasing the pack.
He says: “While I am still concerned about the outlook of the financial services industry as a whole, Japanese financials still look reasonable. Infrastructure and industry in Japan will do quite well and they have got some fantastic high-quality blue-chip companies which are now as cheap as they have ever been.
“Cutting through all the mess, Japan looks like a reasonable place to park some assets. In 2008 and 2009, US and Japanese equities might do rather better than emerging markets and Asia in relative terms and could be top of the pops.”