TwentyFour Select Monthly Income Fund (SMIF) is maintaining its investment bias towards Europe over the US, amid concerns over policy risk and a jobs slowdown in the world’s largest economy.

Ashley Paxton, chair of SMIF, told Alternative Credit Investor that the fund focuses on developed market credit exclusively, with a European bias, and “from a fundamental perspective, we’re happy with that at the moment”.

“The policy risk in the US is much higher,” he added. “The President is attacking the independence of the Federal Reserve. And we’re starting to see signs of a tariff-driven labour slowdown.”

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George Curtis, portfolio manager at TwentyFour, said from a broader fixed income perspective, he has seen flows out of the US into Europe.

“While it may not make sense to go underweight on the US, investors are going more towards neutral,” he said. “On aggregate, that’s quite a large flow.”

However, Paxton noted that Europe faces its own challenges, particularly Germany which is struggling with a manufacturing recession.

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“We’re comfortable being invested in euros over US dollars,” Paxton added.

Looking at the UK specifically, Paxon said that growth has been “pretty strong” and predicted that the inflation dynamic will be better next year than last year, as price increases in areas such as utility bills will roll out.

SMIF invests in a diversified portfolio of credit securities. Its first-half results, released in June, revealed a net asset value total return per share of 4.9 per cent in the first half of its fiscal year, boosted by higher interest rates that benefitted collateralised loan obligations in its portfolio.

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