By Kira Nickerson Credit Suisse European has widened its exposure to mid caps, following its change...
By Kira Nickerson
Credit Suisse European has widened its exposure to mid caps, following its change of manager three months ago.
Raj Shant took over the fund this summer following the departure of Patricia Maxwell-Arnot. While much of the portfolio has been left unchanged, Shant has increased the number of holdings from 40 to 47 and said he may look to add more to the fund.
He said: "In march when the technology, media and telecoms bubble burst we were heavily underweight that sector and we were overweight cyclicals when they started to bounce back. I am more cautious on Europe now and have reduced our position in auto components, metal producers and chemicals and have bought more banks, which historically was our main underweight position."
While Shant is not bearish on Europe, he does believe that it will present a greater challenge over the coming year due to the predicted slowdown in the US and UK economies, two of Europe's largest trading partners.
As such, he is no longer focusing on stocks at the sector level but at individual stocks across the market. He said: "The environment will be a bit tricky going into the next year and so we are looking for companies that can provide dependable profits growth.
This is why we have turned to the mid cap area of the market. We are still a blue chip fund but the flexibility of being able to reach down into the mid cap range when we see value will help us exploit the opportunities we see in the market."
At the moment the fund has a 4% weighting in that area but Shant said he would be comfortable for mid caps to rise to 10% of the portfolio.
While the fund remains underweight technology as a whole, the portfolio has moved overweight technology hardware and underweight telecom operators and software.
With his outlook for the market being more stock specific, Shant said while technology, media and telecoms performed as a group over the past year, there is likely to be greater divergence in the future. He said: "The market should have lumped them all together but now there are massive differences and divergence in stocks. Over the next few months it will continue to operate that way."
Credit Suisse European has moved overweight oil and gas and food retailers and is underweight utilities and engineering.
The fund has seen recent improvement in its performance despite posting negative returns for the three months ending 13 September. Over that period the fund fell by 0.6%, on a bid to bid basis, and is ranked 33 out of 103 funds in the European ex UK sector. This compares to the fund's one year figures, with bid to offer returns over the year to 13 September of 16.6% and ranked 91 out of 99 funds.
Credit Suisse Asset Management is looking to build up the number of stock selection analysts it has working on the European desk. The group currently has seven members and is looking to build it up to 14.
Improving portfolio diversification
Hanging on the telephone
German recession concerns