Rathbones’ James Thomson (pictured) has warned of a “stormier 2018” as he predicted the macro outlook will weaken, with deteriorating growth prospects in the second half of the year.
The manager of the £1.1bn Rathbone Global Opportunities fund forecast the deterioration would start in the US “but like a disease will spread” across the globe, with politics playing a role.
In spite of his downbeat forecast, Mr Thomson admitted he had never been so fully invested in his entire career as he is in his portfolio now.
Speaking at the Chelsea Investment Dinner this week, hosted by Chelsea Financial Services, the manager said the UK had been the biggest change in his portfolio over the past year.
Prior to the EU referendum in June 2016, he had 25 per cent of his fund in UK holdings but that has since reduced to just 6 per cent, some of which was down to stock specific reasons but most was due to “Brexit reasons”, he noted.
Among the UK holdings he sold were advertising giant WPP, Aberdeen Standard Life and Auto Trader.
Mr Thomson said most of that had been reinvested into European companies, particularly into Germany.
Of Brexit, he added: “Why enter the debate? I have global flexibility.”
Ainslie McLennan, co-manager of the Henderson UK Property PAIF, which invests in UK commercial property, also voiced her concerns about the UK’s departure from the EU and said she had “positioned the portfolio for chaos”.
She insisted: “There can’t be no fallout from Brexit.”
Ms McLennan, who has been running the portfolio since 2009, has completely sold out of offices in the West End in London, although she still likes London high streets.
She is also holding 16 per cent in cash and added, “if we feel we need to keep raising cash, we will”.
“We have been positioning the fund to protect investors from any potential fallout as we go through the process of extracting the UK from the European Union, making sure that the fund’s income is as steady as it possibly can be.”
Ms McLennan and her co-manager Marcus Langlands Pearse have also reduced the fund’s allocation to regional offices outside the south east to zero.
The fund was one of those suspended after the referendum last year, when many investors went to pull their money out of property funds.
She pointed out the fund had been £4bn in size before the referendum and was then suspended for 100 days. It is now £3bn in size.
Mr Thomson, who invests in growth stocks through his fund, said the “US was still a hotbed of innovation in growth” and that he would question whether valuations in the US equity market are “stupidly high”.