Thesis adds to European exposure as political risk subsides

 
Thesis Asset Management has added to its exposure of European equities in light of recent political events throughout the continent across six of its seven-strong range of model portfolios.
European equity markets were buoyed by the French centrist candidate Emmanuel Macron winning in both the presidential and legislative elections, while the Netherlands elected the centre-right VVD party over the far-right PVV.
As a result Thesis moved to take advantage of this market sentiment, investing some of its cash exposure into the Oyster Continental European Selection fund from SYZ Asset Management across its collectives and securities model portfolios.
James Nield, investment manager at Thesis, said the elections in Europe so far in 2017 are in contrast to the theme that emerged in 2016 following the Brexit vote and the US presidential election.
“In contrast with the dissatisfaction with mainstream politics that was a theme of 2016, populist candidates have failed to capitalise on strong support in opinion polls ahead of elections in the Netherlands and France,” he said.
“We reduced our underweight exposure to Europe as we see improving economic and employment data. Headline valuations of European equities are attractive especially relative to other markets.
“The Oyster fund has been included across mandates as the fund complements our current European equity holding, the JPM Europe Dynamic (ex-UK). The manager runs a concentrated portfolio and looks for quality companies with growth potential that operate in volatile markets.
“The fund also offers unhedged exposure to the euro which we believe will benefit performance in the short term.”
Elsewhere in the securities model portfolios and UK Equity Strategy, the company has purchased AstraZeneca, as well as increased its weighting to Legal & General. In the meantime it has sold its share in Dunelm Group and decreased its weighting to housebuilders Berkeley Group and Bellway.
“We are bullish on the pharmaceutical sector, with new classes of drugs potentially set to transform certain areas of medicine and giving potential for good growth in the years ahead,” Nield said.
“Meanwhile for housebuilders, a significant recovery post-Brexit vote has taken place and headwinds are emerging for the sector. With the increasingly stretched affordability of housing, it is prudent to trim back our exposure and take profits.”