Fidelity European fund manager Tim McCarron has moved to shield investors from the worst of the current market volatility by taking large sector bets in defensive stocks.
McCarron has guided his £4.4bn vehicle into 7th place year to date in the 103 fund IMA Europe (ex UK) sector, with an overweight healthcare and underweight banking position.
While the Fidelity European fund is down 4.39% year to date, the MSCI Europe ex UK index is 12.81% lower over the same period.
McCarron attributed the superior relative performance to his recent defensive plays.
“The underperformance of the healthcare sector in the middle of Q2 presented a good opportunity to buy healthcare stocks,” he says.
“While the market has been against healthcare stocks-2011 patent expires and US presidential elections-I believe that these issues have now been priced into shares.”
McCarron says he would avoid financials until the European and US economies pick up.
“I will steer clear of banks and real estate... but remain neutral in the insurance sector, which I believe has been unduly punished due to problems in the banking sector,” he says.
“I have started to avoid oil consumers, such as autos and airlines, which are directly effected by higher oil prices, as well as consumer discretionary stock including media, travel and leisure.”IFAonline
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