Jupiter fund manager Guy de Blonay has increased the cash weighting in his £696m Financial Opportunities fund to 10% from 1.45% in July.
De Blonay (pictured) says he did not see the volatility in August as a buying opportunity for the fund, which is co-managed by Philip Gibbs.
He says: “We did not do much trading in August. Once we have a relatively reassuring plan from the main central banks, especially in Europe but also in the UK and US, we could see some of the opportunities that are emerging become much more interesting.”
De Blonay has a 43% exposure to banks as of the end of August. He had reduced the fund’s exposure to banks from 47% at the end of April to 31% in June 30. He says the European Central Bank must reduce yields in Italy and Spain and the European financial stability facility must grow before he will increase his weighting in European banks. He says this will bring down share prices.
He says: “We are staying away from European banks because we believe share prices can go much lower. If Greece goes through an orderly default, banks will have to buy down a significant amount of sovereign bond exposure and they will have to raise capital through rights issues. If that happens, it is not certain that investors will be willing to participate, so governments will have to step in like they did in 2008 and 2009 and fill the gap by buying into companies to keep them afloat.”
Darius McDermott, the managing director at Chelsea Financial Services, says: “Holding some cash and taking selective bets seems a sensible strategy.”