“We are overweight Europe,” he expanded. “All of Europe is not equal, and we accept that value has been hard to find in large-caps, but we do like some small and mid-caps and the pull-back has not actually been that bad.
“There are so many worries around at the moment and a lot of pull-backs are systemic and driven by a sudden onset of fear. In this kind of environment you feel sorry for active managers – who get killed regardless of what they are holding – and it does make more sense to hold an ETF.”
Seager-Scott also employs an ‘inverted’ core/satellite approach – however, while he agrees that European equities is an attractive market, there are certain nuances he does not see as fit for ETF exposure.
“We use active funds as our core exposure and ETFs as almost a buffer around allocation to top up and dial back exposure,” he said. “As well as working for our clients, it is also good for the asset management houses, because they do not want us taking out and putting money back in as we adjust our exposure.
“We are a little bit wary on European banks; the benchmark indices are quite heavily in financials, so we are currently using active managers with blended styles.”
