Henderson Group Plc’s Tim Stevenson, who oversees 5.5 billion euros ($6 billion) in European assets, is preparing for a plunge in stocks.
The fund manager bought bearish options in July to protect his Henderson EuroTrust Plc against a further 6.5 percent decline in the Euro Stoxx 50 Index by the end of the year, he said at a press briefing on Tuesday. For his larger Pan European Equity Fund, he’s increased cash holdings toward 5 percent.
Concerns over the efficacy of the European Central Bank in spurring economic growth have hit the region’s equities this year, with the Euro Stoxx 50 heading for its first annual decline since the height of the sovereign-debt crisis in 2011. Still, the gauge’s valuation remains above the five-year average.
“I would not be surprised to see a 10 percent fall,” Stevenson said at a press briefing at Henderson’s headquarters in London. “The market needs to see a correction.”
Global fund managers are echoing his concerns. Cash holdings have jumped to 5.8 percent in October — as high as after Britain voted to leave the European Union and after the Sept. 11, 2001 terrorist attacks, a Bank of America Corp. fund-manager survey showed.
While Stevenson is expecting more stock losses, he’s increased the Henderson EuroTrust’s weighting in financial companies. He bought Spain’s Banco Bilbao Vizcaya Argentaria SA, added to his holdings in French asset manager Amundi SA, and bought shares of Dutch firms ING Groep NV and Van Lanschot NV. He sold the fund’s UBS Group AG position.