Brookes prepares for summer of bargains

Mr Brookes, who works on the Schroder Multi-Manager range, took on emerging markets exposure in 2015 following around five years with no weighting.

The move, in addition to venturing back into the resources space, came from a belief that a more “normal” inflationary environment would benefit unloved stocks.

The overall weighting to both these areas, which represented around 2 per cent of the £406m MM International fund last autumn, has since risen to 4 per cent and Mr Brookes said the weighting could double again.

“We should be at least neutral; we are still only halfway towards that,” the manager said.

Mr Brookes thought volatility could re-emerge in the summer, offering him the chance to add further exposure.

“There may be some opportunities in the summer,” he said.

“We have got uncertainty about Brexit and the US presidential election looming over us, and probably the re-emergence of what’s going on in Syria.

“I suspect there will be enough worry about the geopolitical backdrop and an economic cycle that hasn’t really got going.

“This will create the normal summer volatility that we have got used to, and that’s a great opportunity to load up again.”

The changes within the Schroders range have meant Mr Brookes taking on the JPMorgan Natural Resources, Artemis Global Emerging Markets and Findlay Park Latin American funds as holdings.

“We tend to buy small amounts often because the first couple of transactions will be a little early,” he said.

“We are playing a change in the cycle, moving away from disinflation and more towards a normal inflation backdrop.

“If we don’t end up with dreadful disinflation, some of the things that have done poorly for so long might do quite well. It’s getting away from the quality and growth-type managers.”

Investment style has had a significant impact over the past five years, with growth-focused asset managers outperforming their value-oriented counterparts, according to research firm FundCalibre.

However, a number of managers have shifted their funds to a value-focused approach in the past year.

Elsewhere, Mr Brookes has reduced overweights to both Japan and Europe, “shaving” holdings in Man GLG’s Japan CoreAlpha offering and Invesco Perpetual’s European Equity fund.

“We think there is value opportunity in Japan and Europe that’s worth playing, but emerging markets and commodities offer a better value opportunity,” he said.

“They [Japan and Europe] are still key overweights.”

The manager has also been topping up favoured holdings, such as the Hermes Asia ex Japan Equity fund, though there has been little change in his fixed income and alternatives positions.

The Schroder MM International fund has outperformed its peer group, the Investment Association Global sector, returning 31.2 per cent over three years against the sector’s 24.7 per cent, FE data shows.