David Coombs, the head of multi-asset investments at Rathbones, is introducing more risk to his portfolios on the back of renewed hope in the eurozone.
Coombs has made incremental moves to increase the £55.5m Rathbone Strategic Growth Portfolio’s exposure to risk assets such as emerging markets, US equities and high-yield bonds.
The manager has added to positions in the Lazard Developing Markets and Veritas Asian funds. The allocation to high-yield has moved from 0% to 3% after buying the Kames High Yield Bond and Loomis Sayles Multisector Bond funds, while dollar exposure comes from the Western US Core Plus Bond fund.
The £6.5m Rathbone Enhanced Growth Portfolio is now overweight emerging markets, moving from the neutral position set when the fund was launched in August.
“Basically, we feel that the central bank coordinated move last week was a game changer,” he says. “The speeches by Sarkozy and Merkel in the following days were not a coincidence. They were under huge pressure from non-EU governments – Britain, the US, China and probably Canada – to get their houses in order.”
Coombs has avoided exposure to the eurozone and intends to do so until a more concrete solution to the region’s debt crisis emerges. He says his only exposure is to Germany, adding: “The DAX is behaving as a very high beta market at the moment.”
Conditions seem more promising in the US and emerging markets, the manager says, despite some obvious risks from the eurozone debt crisis.
The economic data coming out of the US has significantly improved in recent months, he notes, while the growth prospects of Asia remain far ahead of Europe’s even after downgrades. He also considers eastern Europe to look “particularly cheap”, especially in countries such as Russia and Turkey.
“We’re trying to say ‘there’s still a lot of uncertainty but we’ve seen some significant events over the last week or so that lead us to become slightly more positive on the outcome’,” Coombs adds.
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