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View the article online at http://citywire.co.uk/wealth-manager/article/a629983

Chatfeild-Roberts bets with the Fed and piles into Europe

by Matthew Goodburn on Oct 29, 2012 at 10:58

Chatfeild-Roberts bets with the Fed and piles into Europe

Jupiter Merlin Growth's John Chatfeild-Roberts (pictured) has slashed the £1.7 billion fund's cash weighting and piled into European equities on the view that Federal Reserve chairman Ben Bernanke will do whatever it takes to raise the price of risk assets.

He also said that he expects liquidity injections to continue until '2015 at the earliest'.

The team, consisting of Chatfeild-RobertsPeter Lawery and Algy Smith-Maxwell had 11.1% in cash at the end of August but a month later that had been cut dramatically to just 0.7%, as the team anticipate a better near term environment for equities on the back of further quantitative easing.

They said: 'The most important decision that we have made in recent weeks is that we have decided not to fight the Fed; Ben Bernanke has shown his hand. His plan is to do all he can to make people feel wealthier through improving asset prices.His mission is to get US house prices and the stock market up and in doing so he hopes to create the feel good factor that will make people more willing to go out and provide demand.'

The team have also been adding to their UK and US equity weightings across the board, with UK exposure up around 3% to 33.5% and US exposure by a similar amount to 24.2% at the end of September. Some of the reduced cash weighting has been recycled into corporate and emerging market bonds.

The biggest increase though has been a pronounced move into European equities, with the addition of Dave Dudding's large cap  Threadneedle European Select fund. Europe was just 1.2% of the fund at the end of August but now accounts for 7.1%, albeit still around half the weighting of the MSCI World benchmark.

Dudding, whose small cap Threadneedle European Smaller Companies fund is also in Citywire Selection, has posted an impressive 26.5% over five years on Threadneedle European Select, compared to -7.6% by the FTSE World Europe ex UK benchmark.

At the same time, the Jupiter Merlin team have been gradually reducing Japanese exposure, while BGF World Energy has been cut completely from the portfolio.

European exposure has also been increased in the Jupiter Merlin Worldwide portfolio, with the addition of Cedric De Fonclare's Jupiter JGF European Opportunities .

The team added: 'At some point the Fed will have to withdraw liquidity and remove the punchbowl but there is no sign of this happening until 2015 at the earliest. When the facts change we will endeavour to change our minds in a timely fashion.'

Over five years to the end of September, Citywire Selection pick Jupiter Merlin Growth  has returned 20.1% compared to the MSCI World return of 16.8%.

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