Allianz fund adds more risk
The manager of the £29.5m Allianz Brazil fund has been reducing his exposure to defensive stocks and using the proceeds to buy into the energy and materials sector.
He has now moved to overweight positions in both sectors.
“Since the final quarter of last year we have been reducing the names of defensive stock in the fund to add more risk in to the portfolio,” he said.
“We are expecting the country to see robust growth this year compared to last.”
Mr de Leon said he was expecting gross domestic product (GDP) growth in the country to be 3.5 per cent this year, up from 2.9 per cent last year.
As the eurozone debt crisis impacted the country heavily last year, causing risk appetite to wane, he said investors were now experiencing “fatigue” with the region.
“Investors are now shifting away from Europe and we are seeing big inflows into Brazil from foreign investors, which is another reason to add more risk in to the portfolio,” he said.
Meanwhile, the manager was expecting further cuts to the Brazilian real interest rate to made this year, after the country’s government cut rates by 1.5 percentage points (150 basis points) in 2011.
“We would expect another 50bps in March and then April to bring the total cycle of easing down by 300bps,” he said.
The fund has recorded a loss of 0.1 per cent in the year to February 3, compared to an average loss of 5.5 per cent from funds in the IMA Specialist sector, according to Morningstar.