M&G’s Woolnough navigates UK media ‘hysteria’ on Europe

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Richard Woolnough says a diverse workforce has helped M&G’s retail fixed interest team see through UK media ‘hysteria’ about Europe as the industry faces an exit of EU talent following Brexit.

Less than half of EU workers in the funds industry say they are committed to staying in the UK following the Brexit referendum. Eleven per cent of the UK industry are from the EU27, according to the Investment Association.

“One of the great things about having a diverse European team is that you listen to your French, your Spanish colleagues about what the likely outcome is,” Woolnough says.

He adds: “You don’t get caught up in the hysteria in the press of the less-European media that we find in the UK and the US.”

Woolnough says eurozone peripherals became very attractive especially around in the lead up to the French election. The M&G Optimal Income fund currently holds 5.1 per cent in Italy and 4.3 per cent in Spain, plus 11.5 per cent in France.

“Italy, Spain and Portugal have got attractive versus corporates. If I’ve got a choice between Telefonica and Spain, I might buy Spain. If I’ve got a choice between Telecom Italia, I might choose Italy.”

Woolnough isn’t the only fund manager who says EU colleagues have helped provide a less sensationalist view compared to UK media of international politics.

Rathbones Ethical Bond fund manager Bryn Jones says assistant fund manager Noelle Cazalis, who is from France, said there was no way Marine Le Pen would win the second round of presidential election against Emmanuel Macron earlier this year. “When French banks started widening we went out and actively bought those.”

The fund also bought Rabobank during the Dutch election campaign.

The Investment Association has stressed the importance of EU27 workers to the asset management industry as the UK prepares to leave the union. There is currently no agreement on EU citizens’ rights in the UK after Brexit.

Paris-based fund manager Andrew Etherington, manager of the Axa Global Income Generation fund, says they fielded calls every day in the lead up to the French election from investors nervous about a Le Pen victory. “We said quite firmly that we did not believe the National Front was capable of taking power.”

Etherington adds: “The experience of the last year shows it’s normally people outside Europe who overreact and move the markets, which provides opportunities for those who are within Europe to appreciate what the real risks are in terms of probabilities.”

Etherington says he was “impressed” with the relatively muted response from markets when Catalonia declared independence in October.