The Jupiter Merlin fund of funds range, which Chatfeild-Roberts manages with Peter Lawery and Algy Smith-Maxwell, has increased its exposure to Europe since the summer of last year after the outlook for the single currency started to improve.
In July, Mario Draghi said the European Central Bank (ECB) would do “whatever it takes” to keep the euro intact, prompting a rally in equity markets and creating a renewed sense of confidence in the region among investors.
The £1.7bn Jupiter Merlin Growth Portfolio has 7.4% in European equities, its most recent factsheet, dated 30 November 2012, shows. This is up from just 1.8% on 31 August 2012. Meanwhile, the European allocation in the £785m Jupiter Merlin Worldwide Portfolio has moved from 3.2% to 10.3% over the same timeframe.
Chatfeild-Roberts said: “Despite the problems faced by Europe’s economies, the euro has recovered from its lows (albeit still below the level of a year ago) and this together with the support provided by the ECB has encouraged us to increase exposure to quality companies in this region at the margin.”
But the manager added that the the current rally in risk assets appears to be sustainable so long as the ECB maintains its support for weaker eurozone members and the US recovery continues.
“However in reality, not much has changed from a year ago and markets are still facing several long-term challenges. The key issue remains Europe,” Chatfeild-Roberts said.
“The single currency will only work if Germany is prepared to pay for it – for a very long time. But we don’t underestimate the desire of European politicians to keep the ‘European project’ intact, at almost any price.”
