​Rathbone’s Thomson: Europe still looks ‘sluggish’


Rathbone fund manager James Thomson believes that prospects continue to look “sluggish” for both the European economy and many of its companies that have significant exposure to the European consumer.

The manager of the £268.1m Rathbone Global Opportunities fund currently has approximately 18 per cent exposure to Europe.

Although the fund’s stock-specific emphasis means that he would not take an “anti-Europe view”, says Thomson, over recent months he has not been putting a lot of new money into the region on the basis that the European economy remains fragile.

He says: “I would describe my view of Europe as neutral. However everything I see in Europe still looks pretty sluggish. Growth in the region is definitely sluggish and there is still the potential for shocks. Consumer confidence and spending in Europe is awful too.”

Particular concerns over the state of the PIIGS economies means that the fund currently has no exposure to the southern European, says Thomson.

He adds: “I just feel that the PIIGS economies in southern Europe are in such difficulty at the moment that it is very hard for any company to massively succeed there.”

Even “mainstream” companies domiciled in the region are showing signs of struggle, as a result of their exposure to the European consumer, according to Thomson.

He gives the example of Nestle, which is “heavily exposed” to the European consumer. Thomson describes results produced by the company last week as “very dull and disappointing”.

The fund’s more limited European exposure consists of a mix of “individually good companies”, without any particular theme.

However the manager adds that the majority of these stocks do have “a lot of exposure outside of Europe and as such they are not purely focused on European success”.

Thomson has alternatively focused his recent attention on taking the fund’s US exposure to a record high, believing that the slowdown in China is a “gift” for the US economy.