European equity manager Nicolas Walewski has trimmed his peripheral exposure and hedged his portfolio after adopting a more cautious outlook on the eurozone's prospects.
The Citywire A-rated manager and founder of asset manager Alken, said he had hedged 15% of his Alken European Opportunities fund with futures in recent weeks.
Total exposure to Spain and Italy had also been reduced to 20% from 22% since the previous quarterly call where he had upped his exposure to Spanish banks, he said.
Since July last year, Walewski had been increasingly bullish on the prospects of these peripheral countries and been gradually increasing his exposure to them over the last six months.
'The uncertainty following the Italian elections and the Cyprus crisis will raise the cost of capital as a whole in the euro area and leads us to be more cautious,' Walewski told an investor audience.
He added he had reduced risk mostly in Italian financials but remains confident on the certain Spanish names.
'We are more optimistic on Spanish banks just because they have been able to sell off much of the real estate assets they held and have made progress in cleaning up their books.'
Despite a weaker consumer sentiment in the fund's dominant geographic market, France accounts for 26.6% of its overall country exposure, Walewski has increased its exposure to the French retailer Carrefour.
More than 50% of the company's profit is made up of food sales and with its expansion into the Brazilian market, the company retains attractive growth prospects in a an environment of weaker economic data in France, said Walewski.
'There are many good signs at Carrefour and we expect the profit margin to increase by 50% over the next two years,' he added.
'We think they have a very credible management which have newly set prices that will see its market share stabilise.'
The retailer has seen market share shrink in recent years, however this trend is expected to be pared as it acclimatises prices to a struggling consumer market, said Walewski.
The fund saw a strong performance over the last quarter, returning 10.3% compared to a 5.7% rise of the benchmark in the last three months. The major contributor was the fund's overweight in the technology and telecoms sectors.
Walewski added that whilst he had noticed institutional investors, namely pension funds, adding to large firms that are easily traded, such as healthcare stocks and beverages, he stayed clear of such names on a valuation basis.
Over the last three years, the Alken European Opportunities fund returned 38.3%. Its benchmark, the STOXX Europe 600 NR index rose 22.1% over the same period.