Stewart Cowley says he has sold out of his Spanish holding in the £337m Old Mutual Asset Managers (Omam) Global Strategic Bond fund in advance of last weekend’s Irish bailout.
Cowley removed the play in the middle of October, after Ireland said it would spend its cash to avoid the debt markets this autumn.
At the end of September, his investments had included a 3.8% top 10 holding in Spanish government debt.
Investors fear eurozone contagion will spread from Ireland, Greece and Portugal to Spain.
The country has 20% unemployment, a projected 9% deficit and non-existent GDP growth. (article continues below)
“Although macroeconomic data in core Europe remained broadly positive in October, problems in peripheral Europe resurfaced in the form of banking issues in Ireland – Allied Irish Banks – and unbalanced books in Greece, due to insufficient tax revenues,” he says.
“Both countries were punished by the market in the form of rising default insurance costs, highlighting the divergence between core and peripheral Europe and leading to growing concerns over the likely impact on the other Piigs economies [Portgual, Ireland, Italy, Greece and Spain].
“As a result we cut all direct exposure to peripheral eurozone markets.”