The U.S. will save the world. That’s according to Sweden’s Coeli Asset Management, which oversees about $1 billion and has positioned itself for a broad recovery driven by U.S. economic might.
“The U.S. has shown again that they’re the best in the world at everything -- they can be out for the count, but when they get momentum, they’re like an old steam engine and just go,” Christian Voboril, a fund manager at Coeli in Stockholm, said in an interview. Thanks to the U.S., “I am convinced that Europe will recover and that the worst is over.”
Voboril, whose Coeli Select Sverige fund returned 30% last year following a 29% gain in 2013, says his strategy focuses on Swedish equities that will benefit from faster U.S. growth and a European rebound. He says when “pent- up demand” picks up, the effect will accelerate and affect more industries.
His Select Sverige fund has a maximum of 15 investments. Right now, he favors clothes retailer Hennes & Mauritz AB, as well as a group of industrial companies he says will benefit from recovering economies, including Trelleborg AB, Skanska AB, Sandvik AB, Haldex AB and SKF AB.
Voboril, and his fellow asset manager Andreas Brock, say a large part of Europe’s recovery will come from its weakening currency. The euro has slumped about 16% against the dollar over the past 12 months as the European Central Bank unleashes quantitative easing to fight deflation.
“What is saving us is that the U.S. is doing so well, which is allowing the euro to devalue,” Brock said. “Without that, and if we had had to do quantitative easing both in the U.S. and Europe, the situation would be different. Right now, we can allow the dollar to strengthen so that Europe can devalue out of the crisis, and I think that will work given that the U.S. is so strong. The risk is Russia, of course.”
Brock’s recently-started Coeli Global Selektiv fund invests in 25 to 35 companies globally. About 40% of the fund is allocated to the U.S., where the Swedish asset manager says lower oil prices are proving more of a boon than a threat.
The fund also holds shares in industrial companies in Europe, such as Italy’s Brembo SpA and Germany’s Kuka AG.
Both Brock and Voboril argue that many investors are underestimating the extent to which lower energy costs will benefit a number of industrial companies, such as Trelleborg, the world’s biggest maker of vibration-dampening gear.
“For Trelleborg, their raw material costs are going down incredibly much because of the falling oil price and I think investors have focused too little on that,” Voboril said. “Trelleborg’s shares did quite poorly last year but that will change this year -- of that I’m totally convinced.”
Trelleborg rose as much as 0.5% to 150.6 kronor in Stockholm trading and was unchanged as of 2:28 p.m. local time. Sandvik increased as much as 1.6% and Haldex added as much as 0.7%. Italy’s Brembo gained as much as 1.9% and Germany’s Kuka added as much as 6.6%.
A 50% plunge in the price of oil over the past year has made some markets less attractive. Brock says his fund is avoiding Nigeria for that reason and is instead shifting to Indonesia and Thailand. Russia is completely off bounds because the economy there “is fundamentally unwell,” he said.
“I don’t own a single share in Russia and see no reasons whatsoever to invest in Russia at the moment,” Brock said.
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