Head of investments at the firm, Andrew Merricks, said he did not think the gloomy predictions of commentators would come to pass, with the result of elections in the Netherlands, France, Germany and Italy having little lasting impact on markets.
In fact, he believes markets will be relieved following each potentially disruptive event and the discount at which Europe is currently trading will begin to close.
He has confirmed a shift in the firm’s position to overweight in European small-cap assets arguing that history has shown the smaller companies sector to be “surprisingly resilient”.
Anticipating a steadier course for European politics this year, Merricks has opted for a stake in three separate European-focused funds: the JPMorgan European Small Companies Trust and JPM European Small Companies unit trust, as well as the F&C European Assets Trust.
“We are overweight on small cap. We have become more overweight in European small caps. We are going down the line of thinking that Europe and its political stirrings will be a bit of a red herring this year,” Merricks said.
“Once the elections pass off I think the markets will probably respond with a bit of a sigh of relief.
“There’s much value to be found there if you are taking a nine or 12-month view.
“I think it is a case of trying to look where others aren’t,” he added.
