Fidelity’s Akbar cuts European holdings
Fidelity’s £122m Multi-Manager Growth fund manager Ayesha Akbar has doubled her weighting in bonds and almost halved her exposure to European equities.
Ms Akbar began increasing her European exposure in November last year, when markets took a dive on eurozone fears and the exposure peaked at 11 per cent in the first quarter of this year.
However, after the market rush following the long-term refinancing operation (LTRO) measures and slowing global growth generally, Ms Akbar said she had been reducing her exposure to equities and “particularly Europe”.
The manager said her exposure to equities peaked in the first quarter at 85 per cent and is now down to 78 per cent.
“I have been taking money away from equities and have gone back into bonds and cash as I have become less positive on the global growth outlook,” Ms Akbar said.
“I was more positive on Europe at the beginning of the year and that worked out during Q1 but I have been reducing exposure in Q2.”
Ms Akbar has sold some of her exposure to BlackRock’s £331m Continental European fund as a way of reducing her European exposure as well as trimming her other two holdings. Mr Devlin did feature in the fund’s top 10 during Q1 but it is longer there.
The manager said the proceeds from the sales has gone to boosting her fixed income weighting from 2.5 per cent to 5 per cent.
“I have been getting more defensive and have been very reluctantly adding to bonds,” she said.
“It is very difficult to justify buying bonds on present valuations but with inflation coming down, the uncertainties we are seeing and potential action by monetary authorities to try and support bonds we could have a period where bonds do well.”
Ms Akbar said she has added to the Loomis Sayles Global Opportunities Bond fund, which invests in high-quality government debt and credit.
The manager said she has also trimmed her exposure to Asia by roughly 2 percentage points because she is “concerned about China because growth has slowed there quite a bit”.
“The Chinese do have the firepower to deal with this but I am concerned about the rise in food prices during the past quarter as that impacts on inflation and could have an impact on how much the Chinese authorities can stimulate growth.”
The manager said even though cash is her “least favourite asset” at the moment, she has an 8 per cent weighting in it. She said this level puts her “in line” with the rest of the IMA Flexible Investment sector.
Ms Akbar said she would ideally put the cash to work in alternative investments and said work being undertaken at present should result in some related holdings in the coming months.
“When I am looking at alternatives I want as little correlation with equities as possible and so if I add a new position it is likely to be in a global macro fund or a currency fund.”