The £340m fund currently has 45% invested in the eurozone, Scandinavia, Switzerland and the UK.
"Current valuations mean there’s no safety cushion,” he says, “so if there’s a shock to the system or a change in sentiment you will see the market wobble.”
He added: “You could see that in market movements last week [when the ECB cut the refinancing rate to 0.25%]. We are in a policy-driven market, so the risk is a policy mistake, because when interest rates are very low it allows governments to make mistakes."
He has subsequently added two US pharmaceuticals companies: AbbVie, which he says has a mixture of surprisingly good growth and strong cash flows, and in the past three weeks he has also added Merck.
"I have 10% defensively positioned, mostly in pharmaceuticals and companies with good earnings momentum and a bit of price momentum," he explains.
He has also increased exposure to Danish Telco TDC, a relatively low-growth firm which he expects to outperform in a falling market.
He has also reduced exposure to what he describes as "European green shoots stocks", including the French building-materials firm St-Gobain, which was trading at 18x earnings. "At that price the recovery was priced in, so you would have to be betting on major expansion and top line growth for that valuation to be attractive," he says.
