Jupiter Primadona Growth trust manager Richard Curling has backed the Schroder European Alpha Income fund as the best way to play an expected resurgence in fortunes for the continent’s stocks.
Mr Curling’s £52m trust buys UK stocks directly but selects funds to gain overseas exposure.
European funds account for 10 per cent of this exposure, versus the continent’s 5 per cent weighting in the manager’s benchmark.
Mr Curling said he had added further to James Sym’s £500m Schroder fund in recent weeks to capitalise on the ongoing monetary easing in the region.
European Central Bank president Mario Draghi gave European equities a boost last month when he hinted the bank’s €1.1trn (£779bn) quantitative easing (QE) programme may be expanded further in December.
“We are still at an earlier stage of the QE cycle in Japan and Europe, so it is not unreasonable to expect more,” Mr Curling said.
He had already been building a position in the Schroder fund during the summer: the portfolio entered his top 10 in August and accounted for 3.1 per cent of assets at September 30.
His largest European fund holding is Alexander Darwall’s Jupiter European Opportunities trust, but the manager said the use of an in-house fund was an exception rather than a rule.
Although he also holds Simon Somerville’s Jupiter Japan Income fund as a play on another favoured region, he said: “I think it looks better and cleaner if we do not use Jupiter funds. But where there is an exceptional portfolio, we will buy it.”
Mr Curling’s largest position remains the Findlay Park American fund, at 8.6 per cent of the portfolio as of September 30.
Recently he has been reducing his exposure to the US, given the steeper valuations he sees there.
The long-held Findlay Park fund is an example of what the manager described as his ability to “piggy back” on Jupiter’s Merlin multi-manager team, allowing him to access funds that are soft-closed to other investors at more attractive fee levels.
The Primadona trust’s board proposed to change the company’s name to the Jupiter Global Trust at its annual general meeting on November 16. The manager said he preferred to achieve this global exposure via a specialised approach, rather than through global equity portfolios.
He said: “Global equity [funds] are a great idea, but in practice it’s really difficult to find someone who’s good at it. I think specialisation provides better returns.”
But he acknowledged this desire could go too far and he is wary of investing in individual country emerging market funds due to the concentration of risk.
Nonetheless, Mr Curling said he had considered an India fund in the summer.
He said emerging markets in general were starting to present some “interesting opportunities”, in Asia in particular, though he has not yet increased exposure beyond his Prusik Asian Equity Income holding.
