Bruce Jenkyn-Jones said he has been selling down his exposure to US companies in his Old Mutual Ethical fund in favour of European and Japanese businesses.
Mr Jenkyn-Jones, who is managing director of listed equities at Impax Asset Management and has run the £77m fund on an outsourced basis for Old Mutual since July 2010, said valuations of US businesses had become more stretched following strong rises in the country’s stockmarket.
The manager said he had therefore decided to increase his weighting to Japan from 4-5 per cent to roughly 7 per cent and had also boosted exposure to Europe in a bid to find companies at cheaper valuations.
“One of the things about the US is that it has been a very strong-performing part of the fund with some good earnings from the companies,” he said.
“But valuations are notably more extended then other parts of the world and so I have typically been taking profits from the US.”
In terms of Europe, the manager said he had exposure to companies in Germany, France, Switzerland, Austria and Ireland.
“You can find a number of companies that are doing similar things to US businesses but at cheaper valuations,” he said.
“Also, more recently I have become more positive on Japan as it has a very advanced energy-efficiency sector and the weakening yen brings opportunities.”
The fund used to be a multi-manager vehicle with Impax providing an offering as one of the underlying holdings, but the company was given full control of the fund three years ago.
From July 1 2010 to July 8 2013, the fund has delivered 39.5 per cent compared with the IMA Global sector average of 38.7 per cent, according to FE Analytics.
Mr Jenkyn-Jones said the fund focused on companies involved in sectors such as resource optimisation, energy efficiency, pollution control, as well as water and water treatment.
He said it actively excluded businesses linked to industries where child labour was used or firms involved in alcohol, tobacco and weapons manufacturing.
Asked why the fund was not bigger, Mr Jenkyn-Jones said investors were often keen to see strong long-term performance, but thought with three-year numbers under his belt assets could be gained.
“The history of the fund before we took over was a bit sporadic and people are looking for a track record,” he said.
“The three-year numbers are credible and the one-year performance is good, so we are positioned for growth going forward.”
In spite of the fund being viewed as highly cyclical – it had 50 per cent in industrials at the end of May – the manager said it only held 5 per cent more in what were deemed cyclical stocks than the MSCI World index.