He said growth in the eurozone was “sluggish” and bond yields had been pushed even lower.
He questioned why investors would want to buy the debt of European companies at such low yield levels. With investors “showing no prospect of relenting their search for yield”, he predicted defensive, high-yielding, bond-proxy stocks “should continue to be rerated in the medium term”.
Manager keeps faith with pharmaceuticals and smart cars
Henderson European equity manager John Bennett is sticking to his guns on two long-standing themes in his portfolio: pharmaceuticals and smart cars.
His commitment to pharmaceuticals and smart cars served him well last year in his European Selected Opportunities fund. Healthcare is his largest sector holding, making up 29.8 per cent of the portfolio.
Switzerland-based healthcare companies Novartis and Roche are Mr Bennett’s top-two holdings, making up 7.5 per cent and 7.3 per cent of his fund respectively.
Healthcare firm Fresenius, which is domiciled in Germany, is his third-largest holding and makes up 5.7 per cent of the fund.
He noted that the group contributed strongly to performance, having benefited from revenue growth in its medical supply division.
Elsewhere, Mr Bennett’s other favoured theme – smart cars – also added considerable value to his fund. Positions in Swedish vehicle components business Autoliv and France-based Valeo boosted the fund’s performance.
Autoliv makes up 3.3 per cent of the portfolio and had a strong performance last year after it announced it would supply replacement airbag inflators to Honda Motor Company.