Threadneedle’s Burgess reduces US for Asia and Europe

Threadneedle’s Burgess reduces US for Asia and Europe

Threadneedle Investments has slashed its exposure to US equities in favour of heftier weightings in both Europe and Asia across its multi-asset funds.

While the firm’s equity strategy had been weighted to the world’s largest economy, as well as the UK and Japan, the fund management group feels there is a distinct lack of value on offer across the US.

Chief investment officer Mark Burgess said: “The US equity market’s valuation overall now looks relatively stretched given both its outperformance, and more worryingly, the impact of a stronger dollar on profits.

Article continues after advert

“As a consequence, we have moved overweight in both Asian and European equities, funding both of these moves by taking our US equities exposure to neutral.”

In regards to Europe, Mr Burgess asserted that “a number of decent tailwinds” including a weaker euro, the lower oil price and the potential boost from the European Central Bank’s upcoming quantitative easing programme have collecting caused him to review his positing across the economically embattled region.

“It is quite possible that we will see upward revisions to GDP growth in Europe this year, a first for many years. Corporate profits will be supported by improved competitiveness as a result of the currency, and valuations are relatively lower. Interestingly, earnings revisions have just turned positive, albeit in a very small way,” he added.

In addition, despite Asia’s prolonged period of underperformance, Threadneedle has moved overweight the region for the first time since 2013, Mr Burgess now believes “valuations are looking more and more attractive”.

“Whilst there a number of obvious losers in the region as a result of the oil price fall, there are many winners and we are increasingly finding interesting investment opportunities,” he said.