SVM Asset Management has been adding to holdings in industrial stocks such as British engineering group GKN, Italian tyre maker Pirelli and car manufacturer BMW, on expectations that the broader economic backdrop will improve in 2013.
"We've been adding to cyclical areas and, at the margins, financials," says SVM fund manager Neil Veitch, who adds that his firm has also bought shares in Swiss bank Credit Suisse in recent weeks.
"I think we will see markets continue to grind higher next year, underpinned by central bank action and an economic environment getting a little bit better," says Veitch.
"The world, from a macro perspective, should get a little bit better next year. We could see year-on-year growth coming out of Spain and Italy."
Like the majority of investors and analysts, Veitch expects U.S. authorities to reach a deal to avoid a looming "fiscal cliff" of government spending cuts and tax rises due to start next year, and which could hamper the U.S. economic recovery.
However, he says it would be unwise for investors to trade around the event.
"Trying to trade your portfolio around what may or may not happen on the 'fiscal cliff' seems to me to be a recipe for disaster."
Reuters messaging rm://firstname.lastname@example.org