As investors become less fearful about Europe, Bambos Hambi has ploughed more cash into the Continent in a bid to increase his overweight.
The manager of the £6bn MyFolio range at Standard Life Investments (SLI) said he first upped his exposure to Europe in June last year in anticipation of easing measures, but had invested even more in February.
“When quantitative easing happened, we were impressed by the larger-than-expected programme, which demonstrated the European Central Bank’s commitment to raising inflation,” Mr Hambi said.
“We felt it would entice investors to buy equities and that it would help the euro depreciate even further, which would be favourable for European exporters.”
He said he had increased his exposure to existing holdings, the Artemis European Opportunities fund run by Mark Page and Laurent Millet, and Edinburgh Partners’ European Opportunities fund.
The latter was added to give his portfolios a different European composition, the manager explained.
“We had done so well out of the growth position, typified by the Artemis fund, we wanted to increase our value exposure,” he said. “We still have a growth bias overall, though. The funds have a very low correlation to each other as well, which is important.”
Elsewhere, he said he was confident the global economic recovery was sustainable as it was being driven by business activity, consumer spending and lower energy costs. He added there was also further monetary policy easing underway globally.
“When we weigh that up, we believe equities are preferred to bonds, but we know corporate earnings need to rise to justify stock valuations,” he said. Earnings were “one of the things we watch carefully”.
Other things the manager said he monitored were the potential for interest rate rises in the US and UK and the regulatory environment for several industries, including banks, asset managers and utilities.
The prospect of a hung parliament in the UK and the possibility of a referendum on EU membership were both worrying, he added.
Growth in the MyFolio range has been strong, with assets just above £6bn. They stood at roughly £2.8bn in April 2013. Mr Hambi said his team had also grown since then, from five people to 11. This includes the recent hire of James Millard from Old Mutual Wealth.
The manager said Mr Millard was now responsible for negotiating fees for the underlying funds the MyFolio range buys, as well as being heavily involved in considering where else SLI might look to sell the MyFolio range.