BoJo appointment worries Kapstream
The potential appointment of Boris Johnson as UK Prime Minister has done little to reassure investors wary of the UK due to Brexit.
Kapstream, a subsidiary of global asset manager Janus Henderson Investors, said they were avoiding both Europe and the UK and the change in leadership had failed to change this view.
In a fund update for its $5.9 billion Kapstream Absolute Return Income fund, the firm said it had only 4 per cent allocated to Europe compared to 69 per cent in Australia and 16 per cent in Asia.
“We have mainly avoided UK positions since the 2016 Brexit vote, believing we had little insight into the political decisions that will ultimately drive economic performance. We had been sceptical over the leadership’s ability to deliver a workable Brexit solution and recent developments reinforce our view.
“We expect to continue to avoid Europe, given uncertainty surrounding the Brexit campaign, low yields and limited corporate profitability.”
This was the second manager to express doubts over the UK following comments by Morgan Stanley head of wealth management research Nathan Lim last week that the UK was currently “uninvestable”.
As well as European equities, Kapstream was sceptical of European fixed income as it felt stresses in the continent had increased, particularly with regards to the Italian government.
“We remain less supportive of European bond opportunities. Stresses in the Euro region have increased, particularly with the emergence of an Italian coalition government focused on decreasing taxes and increasing spending with little concern over growing deficits. With Italian risks increasing, we believe it will be difficult for the European Central Bank to avoid further stimulus.”
The Kapstream Absolute Return Income fund has returned 3.4 per cent over one year to 30 June, according to FE Analytics, versus average returns by the ACS Absolute Return sector of 1.6 per cent over the same period.
AUTHOR
Laura Dew
Recommended for you
Perpetual has seen AUM rise 6 per cent in the last quarter but the departure of a longstanding JOHCM fund manager led to outflows of $2.2 billion from his strategy.
In the latest Meet the Manager profile, Money Management speaks with Michael Skinner, founder and managing director at Blackwattle Investment Partners.
Global fixed income fund Bentham Global Opportunities has been added to several major platforms, enabling it to be accessed more easily by financial advisers.
Following yesterday’s news about First Sentier Investors closing four investment teams, a second global asset manager has announced it is closing its only dedicated Australian fund.
