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Performance review: why Arbuthnot's Osman is still overweight Japan

by Elsa Buchanan on Apr 08, 2014 at 15:23

Performance review: why Arbuthnot's Osman is still overweight Japan

Eren Osman, senior investment manager at private bank Arbuthnot Latham, is keeping faith in Japan’s ‘Abenomics’ reform policies.

Throughout 2013, Osman built a 15% overweight to the country in the firm’s medium risk model, partly through a position in the Polar Capital Japan fund, managed by Citywire +rated duo James Salter and Gerard Cawley.

‘We’re supporters of their fund because Salter is looking to get some leverage out of the yen devaluation through exporters, buying into the yen making its way to $1.15 or $1.20,’ Osman said. ‘That’s what we’ve been keen to expose ourselves to.’

Similarly, he expects European earnings growth to continue to surprise on the upside compared to the US. This has led him to add to the long/short BlackRock European Hedge fund, taking it up to 4%.

‘[AA-rated manager Alister Hibbert] has got one of the smartest minds in the City when it comes to European equities.’

While overseas equities are accessed through funds, the portfolio invests in individual UK stocks. Osman has held housebuilder Taylor Wimpey for 72 months and profited from its 50% return over the past year.

This year, however, he is accessing the UK housing play through banks, particularly Lloyds, where the model already has a 1.12% allocation. In January, he sold out of LSE and added Barclays, where he has a similar exposure.

Long-term, Osman is playing the Asian consumer story, ‘ultimately buying into the thesis, despite the bumps’, he explains.

‘We maintain a high level of conviction in the rise of the Asian consumer. As hundreds of millions of people move into the middle class, their disposable income will allow for increase expenditure in consumer staples.’

The portfolio maintains a 2% exposure to the Coupland Cardiff Asian Evolution fund, in light of its allocation to domestic consumption stocks. The fund is managed by AA-rated Rory Dickson.

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