Global equity manager Andrew Jones has said the US is the region he is most “vigilant” of following the market’s recent slowdown.
The manager, who runs the £741m Henderson Global Equity Income fund with Ben Lofthouse, said he was already underweight the US but was looking to make his allocation to the country more defensive.
After a solid 2014, when the S&P 500 index rose 13 per cent in dollar terms, the market has so far this year gained less than 3 per cent, data from FE Analytics shows.
This has become a warning sign for Mr Jones in terms of how he plays his 32 per cent exposure to the country.
“If there is one thing that we need to watch it would be the US,” he said.
“The first quarter was relatively weak. The US has been the engine of growth for the world in the past couple of years and it needs to keep doing well. We are being vigilant going forward.”
However, if the situation in the US deteriorated further, Mr Jones said he would start putting more of his fund into defensive areas, such as consumer staples, industrials and telecommunications, should he need to.
Last week, data was released showing the US grew by just 0.2 per cent in the first quarter of 2015, much lower than predicted. This caused the US Federal Reserve to admit the US economic recovery had lost momentum.
The fund this month will have completed three years under its new mandate.
In May 2012, the then Henderson Higher Income fund changed its name, investment objective and peer group sector.
Since then the vehicle has delivered top-quartile returns of 62.2 per cent, beating the 53.6 per cent average return from its peers in the International Association Global Equity Income sector. But it has lagged the 76.6 per cent rise in its benchmark – the MSCI World index, data from FE Analytics shows.
Mr Jones said the fund’s strong returns this year were in part due to its underweight position in the US – he has 32 per cent in his portfolio compared with the benchmark’s 57.6 per cent.
The outperformance is also down to the fund’s bias towards Europe, which makes up 23 per cent of the portfolio.
While investors have generally become more optimistic on Europe, the region is not without problems.
Investors’ concerns about a Greek exit from the eurozone have escalated in recent weeks.
“It’s obviously going to remain a concern,” Mr Jones said.
“We don’t have a huge amount in peripheral Europe. We are biased towards northern Europe.
“However, it is being thought about a lot more than it was a couple of years ago and that’s already a positive sign.”
The manager marginally increased the fund’s allocation to telecommunications within its European holdings in the first quarter of this year. He now holds about 8 per cent, compared with 6.5 per cent at the end of 2014.
He said this increase was funded by selling out of German pharmaceutical company Bayer.
He added that his allocation to healthcare had fallen by about 1.5 percentage points to 16 per cent since the start of this year.
