At the end of April, just 2.30% of the fund of funds’ portfolio was invested in the UK – but this increased to 15.09% after buying into the Neil Woodford’s Invesco Perpetual High Income fund.
Meanwhile, the weighting to the fund’s ‘others’ category – which holds the ETFS Physical Gold, Findlay Park Latin American, Guinness Global Energy and Polar Capital Global Technology funds – fell from 32.97% to 23.31%.
Lawery, who manages the fund with John Chatfeild-Roberts and Algy Smith-Maxwell, says the change was not really a move towards to the UK, but a way to increase exposure to higher yielding, defensive companies with international earnings.
“The UK stockmarket offers a plethora of opportunities to gain exposure to non-domestic businesses,” he explains, but adds: “The majority of businesses connected to the anaemic UK economy are still to be avoided.”
Lawery (pictured) says the fund is attempting to avoid being too exposed to the UK consumer, unless it is through companies that are defensive in nature. This strategy is shared by the Invesco Perpetual High Income holding.
Invesco’s Woodford has a cautious outlook on the UK economy and is focused on stocks which earn a significant portion of their revenues from overseas markets, especially those in the tobacco, pharmaceutical and telecoms sectors.
However, Lawery warns that internationally focused businesses should not automatically be considered attractive investments.
“Europe, as we predicted, is in a mess and even the all powerful emerging markets are not without risks,” he says.
But the manager is more confident in his outlook for the US. Although the Jupiter Merlin Worldwide Portfolio is underweight in the US, it remains the fund’s largest geographic area of investment at 25.63%.
“The US has the ability to resolve her problems in ways that Europe simply can’t,” he concludes. “The US domestic economy will emerge from its crisis, the Europeans are still denying that they have one.”