Guy de Blonay is certainly not afraid of big changes. At the start of this year, he left New Star to rejoin his former employer, Jupiter, quickly becoming co-manager of the Jupiter Financial Opportunities fund. Now, he's planning a major shift in emphasis for that entity - away from Europe, and towards the US and Asia.
"Europe was strong in the past but now the eurozone is more problematic than before and the problems are there to stay," he says. "With the introduction of the austerity packages this is the beginning of lower growth and returns will stay low as a result. I also expect the euro to stay weak for longer.
Looking west...
"I like the US - while it may not have a v-shaped economic recovery, as many forecast, its banks are undergoing expansion, and I expect interest rates to stay lower there for longer. Banks have undergone stabilisation and are now preparing for a medium to long-term growth phase."
Mr de Blonay is not concerned about the prospects for increased regulation, bank reform and possible new taxes on banks. "This is already priced in," he says. "US financials are pricing in quite a lot of negative noise, such as regulation, sovereign risk and taxes, while investors are ignoring the positives. On a historic basis, if you believe we are not going into a double-dip recession, banks are trading at very attractive levels."
...and east
Asia, meanwhile, is in a very different situation to the west, which is trying to kick-start credit growth. "Asia, if anything, has too much expansion and is struggling to contain credit growth, but I think the authorities there have the credibility to contain the phenomenon," says Mr de Blonay. "India is interesting because credit growth has only been going for around two years and is starting to pick up. I also expect non-performing loans in this region to stay low, and in general, debt levels are low with no past legacy."
He also believes infrastructure spending and fiscal stimulus will help in China. "You have also got more attractive pricing on stocks here," he says. "Taking the Bank of China, as an example, more than 50 per cent of its loans are to the government so default rates are significantly lower. The 35 per cent yearly loan growth figure seen in China will not be so high in the next few years because of fiscal tightening, however it should still be around 20 to 25 per cent."
Mr de Blonay will also consider looking further afield at areas such as Indonesia and Malaysia. "Asia should be the future for returns in the next few years," he says. "Even if the economies go through a period of tightening and experience a slowdown, this is healthy as there will be far more sustainable growth for which I would be prepared to accept higher valuations."
The heavy macroeconomic input in this analysis comes at least in part from Philip Gibbs, the co-manager of the JFO fund. The third member of the financials team, Robert Mumby, focuses on mandates for professional investors.
"A reason for getting together with Philip and Robert is because we have different styles," says Mr de Blonay. "Philip takes a macroeconomic focus, I concentrate on distressed developed economies, while Robert looks to the emerging markets."
Mr de Blonay adds that Mr Gibbs' ability to identify macro-trends, coupled with his ability to find the right stocks to exploit such trends, will see the two managers construct the right portfolio for any environment - their central aim over the next two years. "The advantage with financials is that it is such a wide sector with such a diversity of sub-sectors, it allows you to find companies that will do well whatever the economic environment, as they have a low correlation. The sector has the ability to always perform if you pick the right stocks," says Mr de Blonay.
The JFO fund not Mr de Blonay's only role at Jupiter. He's also taken over an institutional mandate, the Jupiter Hyde Park Hedge Fund, from Mr Gibbs. Both men are seasoned hedge fund managers, in addition to their specialism in financials.
The fact he used to work at Jupiter also played a role in his decision to move from Henderson (which acquired New Star). "Henderson is a great outfit, but I wanted the opportunity to join forces with Philip Gibbs - who I have great respect for - this was a considerable part of the decision to join Jupiter," says Mr de Blonay. "Taking the financials franchise at Jupiter a step further is an appealing challenge."
| Guy de Blonay CV |
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Guy de Blonay became manager of the Jupiter Financial Opportunities Fund and lead manager on the Jupiter Hyde Park Hedge fund in June this year. He joined Jupiter in January 2010 as a member of the financials team. Mr De Blonay previously worked at New Star (now part of Henderson) for eight years managing the Henderson New Star Global Financials fund, New Star Financial Opportunities Investment Trust and New Star Financials Hedge Fund. Prior to this he worked for six years as an analyst at Jupiter. |
Closer to home
The fund is aiming for an asset allocation of 20 per cent plus in the US and around 20 per cent in Asia, with cash remaining near to 30 per cent. In Europe, the fund will only invest in companies that operate in economies which create jobs and where the fiscal situation does not require austerity measures. Companies that fall into this category include those in Norway and Switzerland.
An allocation to the UK will continue because, says Mr de Blonay, "it is a big market and has different companies including non-bank financials that are doing well in this environment".
Current favourites include HSBC and Standard Chartered, which together account for nearly 12 per cent of the portfolio. An attraction of these UK-listed banks is that they do a substantial proportion of their business in Asia. "Standard Chartered is a bit expensive but has a tremendous franchise in all the right areas," says Mr de Blonay. "It has an enviable situation that many financial institutions would die for."
