Crux’s Pease cuts exposure to China

Crux’s Pease cuts exposure to China

Richard Pease has reduced his fund’s exposure to China due to unease over the country’s slowing economic outlook, but has separately bought into Spain for the first time since 2008.

Mr Pease runs the £1bn European Special Situations fund at Crux Asset Management, the boutique he established earlier this year after leaving former employer Henderson.

The manager took his fund with him when he moved to Crux in June, two months before the equity market drawdown sparked by worries about the Chinese economy.

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As a result of those concerns, he has sold out of a position in Finnish lift company Kone because of its exposure to the country.

“The company has about 30 per cent of its new builds in China and that is risky,” he said.

Mr Pease said the market volatility had also given him the opportunity to regain exposure to Volkswagen Group – a stock that he had previously divested from his portfolio – via majority owner Porsche.

“The market has been quite sensitive, so we have bought a trading position and we thought Porsche was the best way to get access,” he said.

Elsewhere, Mr Pease has dipped back into Spanish stocks.

The manger has avoided the stocks since 2008, when the poor performance of holdings in that country contributed to him apologising to investors.

He has purchased global healthcare firm Grifols, which produces life-saving protein therapies.

“The company does a lot in North America, so it’s more about there than Spain,” Mr Pease said.

The manager remains cautious on southern Europe and peripheral European countries, and noted that this was where his “silly mistake” was made in previous years.

“I’ve always been Italy and Spain light as there is an extra risk when you invest in companies from these countries,” he added.

Still, Mr Pease has reinvested in some companies in Ireland. The nation makes up 6.2 per cent of his portfolio and is his seventh-largest allocation by country, according to the latest factsheet.

As with Grifols, the manager said the Irish stocks he owned tended to be global businesses.

One of his favoured companies in the country is DCC Energy, which derives a lot of its business from the UK.

The Crux European Special Situations fund has returned 44.6 per cent in the past three years, compared with the 39.8 per cent rise in its benchmark, the FTSE World Europe ex UK index, data from FE Analytics shows.

Last week Crux announced a new European portfolio for Mr Pease. The European fund will target long-term capital growth and constitutes a concentrated portfolio of primarily large-cap stocks.

The vehicle has the flexibility to invest up to 10 per cent in non-Europe-listed stocks.

The management team can also invest up to 5 per cent in the UK and take an unconstrained exposure to the Swiss market.

Crux will offer an income share class, but specified income “will not be the principal objective of the fund”.