Argonaut Capital Partners has introduced 10% exposure to European banks in the £307.9m Ignis Argonaut European High-Alpha fund over the last five weeks.
Barry Norris, partner at Argonaut, has added around 3% exposure to Banca Intesa, BNP Paribas and UBS, which marks the fund’s first eurozone bank exposure in four years.
Norris says: “We have been adding selectively to a few high-beta financials. In the summer, the consensus was there was no solution in sight for the eurozone crisis. We are beginning to see now the outline of a plan that might actually convince financial markets that it could work.”
In the £8.4m Ignis Argonaut European Absolute Return fund, Norris has added risk by closing the short on Spanish Banco Santander and trimming the short on Portuguese bank Banco Espirito Santo.
Jonathan Davis, the managing director at Jonathan Davis Wealth Management, says: “I can see the value of taking exposure to European financials as a short-term trading play but as a longer-term play it is not a good idea. Over the next six to 18 months, one or more European countries are going to default on their loans and international banks are going to take massive losses.”
To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here.