F&C Investments has trimmed back on its exposure to European equities within its multi asset funds owing to concerns over muted growth prospects from the continent.
As a result of the eurozone recovery broadening but not accelerating, F&C’s allocation to Europe (ex-UK) equities has been reduced from overweight to neutral.
One headline figure for this pullback was the recent disappointing industrial production numbers from Germany – increasing by only 0.3 per cent in June whereas a 1.4 per cent increase had been expected by many.
F&C head of multi-asset investment Paul Niven says: “After two years of contraction, the eurozone will see growth in 2014, albeit at a pedestrian rate.
“Indeed, GDP remains below pre-crisis levels as some disappointing performance from the core economies, such as France, has offset the welcome rebound seen from a number of the embattled periphery nations.”
However Niven is confident the euro will remain strong owing to loose monetary policy issued by the ECB to counter low inflation.
Niven adds that any depreciation will be helpful to Europe’s under-pressure exporters.