European Wealth is acutely aware of the danger of holding illiquid property funds but maintains a position in the Schroder Global Real Estate Fund.
“The fund uses much more liquidity, investing in property securities, so it has not got caught out with any of the liquidity issues currently facing bricks and mortar funds. And because it has a large dollar component, it bounced sharply during the referendum debate. We love the fund and are still very keen on the management, who are first rate.”
Clouds and silver linings
According to Stammers, the biggest challenge facing the industry at present is the European economy. “The reality is that it is profoundly fragmented; different parts of it are moving in different directions.”
He believes the troubles in Greece will be nothing compared with the parting of the second-largest contributor to the EU, which is the UK.
“The storm clouds are gathering over Europe. Quite what will happen, no one knows, but it is not a pretty picture. There are clearly going to be a lot of political issues and questions over Italian banks etc. It is all a bit of a mess.”
Meanwhile, European Wealth is positive on emerging markets, particularly emerging Asia. “It was an uncomfortable ride during August and September last year. When markets came back we topped up our positions. So the bounce we saw earlier this year was welcome. In dollar terms, it has been a well performing asset for us,” says Stammers.
However, for emerging markets he advises buying country-specific stocks or using an active manager prepared to make country calls. For its Asia positions, European Wealth invests in JO Hambro’s Asia Small and Mid-Cap Fund. For emerging markets, it uses a combination of Templeton and Goldman Sachs.
“The asset managers can put people on the ground in countries such as Nigeria, which we simply cannot do,” he says. “There are some great opportunities in less mainstream markets but you need people on the ground who know what they are doing.”
In Japan, the wealth manager remains a fan of Schroder Tokyo, while in the US it favours the Hermes Small and Mid-Cap funds.
On a thematic basis, the Lazard Global Infrastructure Fund is a favourite, while the Old Mutual Gold and Precious Metal Fund is a new addition to the portfolio.
Back on home turf, Stammers believes there is a strong chance that the UK will fall into a recession post-Brexit, but the big question now is how deep and how prolonged this will be.
He says: “As long as consumer spending keeps going and ultimately picks up then we could come out of it alright. We don’t see it as an entirely doom and gloom scenario.”
