Last week, the ECB set an end date for QE in December but then added that it would leave interest rates at record lows for a long time.
Kestrel Investment Partners chief executive John Ricciardi said this will present buying opportunities for European risk assets in the next quarter.
Ricciardi (pictured), who is former head of global asset allocation at Iveagh, the Guinness family office, and the lead manager of the Iveagh Wealth fund, has reweighted the Kestrel Global Portfolio to reflect this.
The portfolio now concentrates on sectors favoured by this macro-economic projection and has equity holdings in the banking, telecom and pharmaceutical sectors.
Stocks and sectors added to the portfolio
| Stock | Sector |
| Banco Santander | Banking |
| BNP Paribas | Banking |
| Intesa Sanpaolo | Banking |
| Axa | Insurance |
| Allianz | Insurance |
| Deutsche Telekom | Telecoms |
| Telefonica | Telecoms |
| Orange | Telecoms |
| Sanofi | Pharmaceuticals |
| Bayer | Pharmaceuticals |
Ricciardi said: “The political turmoil in Italy and Spain, combined with Brexit, is likely to prompt additional declarations of monetary policy support for eurozone growth and risk assets from the ECB in Q3 2018.
“This will present buying opportunities for European risk assets later in the summer as the ECB underlines its commitments to expansionist monetary policy.”
According to Kestrel’s analysis, the further ECB support likely in the third quarter this year will help the growth of bank lending, corporate credit, government borrowing, and euro-denominated risk assets, even if at the expense of a lower euro exchange rate.
Eurozone equity market
The chart below shows the Euro Stoxx index near the middle of its range for the past year, having rebounded about 10% from its lows at the end of last quarter. Both the index level and its shorter moving average have shifted for the moment to the upside of the longer term moving average.
According to FE data, the Irish-domiciled Ucits Kestrel Global fund has delivered a cumulative return of 1.1% and 3.4% over one and three years respectively, versus the FCA Offshore Regulated Mixed Asset – Flexible sector’s 1% and 22.5%.
