Jupiter’s Philip Gibbs has slashed his net equity exposure to less than 20% as he adopts an extreme d...
Jupiter’s Philip Gibbs has slashed his net equity exposure to less than 20% as he adopts an extreme defensive position on his Financial Opportunities fund.
Meanwhile, New Star financial manager Guy de Blonay is less bearish, believing the sector could lead the market if the macroeconomic situation improves, but has also taken defensive action.
In January, Investment Week reported Gibbs had placed almost half his fund into bonds and cash.
He has now cut equity exposure to just a fifth of his portfolio in preparation for “considerable” short-term risks.
“The strain on financial assets is intensifying. Bond insurers MBIA and Ambac have been de-rated, which will result in further write-downs,” he said.
“Capital raising and asset sales are becoming more prevalent and at discount prices, while Western property markets are continuing to deteriorate.”
The manager believes oil price surges have fanned inflation concerns, leading to fears interest rates will increase, which he believes would be premature.
“The drop in asset values in the Western financial sector has the potential to become more acute, ultimately leading to a fall in commodity prices and a more prolonged slowdown in Western economic activity,” he said.
“We continue to take tactical steps to enhance investors’ returns.”
The make up of the fund’s 20% equity exposure remains largely unchanged, added Gibbs.
“It consists of highly defensive European banks and selective Hong Kong property stocks,” he said.
“We also hold a few European insurance names, which have particular balance sheet strength, although we hold a precautionary hedge against these and the banks at a time when market conditions look set to worsen.”
To read more see today's Investment Week.
