Norris had a zero weighting to utilities before the Japanese nuclear crisis, but the sector is now the biggest overweight position in his £384m Ignis Argonaut European Alpha fund.
The manager explained: "We’ve had no exposure to utilities in the last three years – power prices have stayed flat, and share prices have done the same."
"However, the German government shut a number of nuclear power plants in March due to growing safety concerns from the public [in the aftermath of the nuclear crisis in Japan]."
"Nuclear power accounted for 15 per cent of reliable output in the region, so these closures have had a big impact on supply. Power prices have increased by around 35 per cent," he said.
"We may not see an immediate spike in performance, but we envisage energy upgrades to drive returns up to 40 per cent in 2013. Looking at the rest of the European market, I can’t see another sector performing this well."
According to Financial Express data, the MSCI Europe Utilities Index has lost 12.74 per cent in the last three years.
Performance of index over 3-yrs
Source: Financial Express Analytics
Norris’ zero per cent weighting to the sector has contributed to his fund’s outperformance over this period: Ignis Argonaut European Alpha is a top-quartile performer over three years, with returns of 11.58 per cent.
However, the manager has added EON, RWE and EDF to his portfolio since the middle of March. The fund has an overweight position in utilities of around 5 per cent.
This increased weighting reflects Norris’ broader move into defensive stocks of late.
"We were overweight cyclicals and underweight defensives in May 2009, but this has turned on its head in the last six months or so," he added.
"The ECB’s raising of interest rates implies that the European economy has probably peaked for the time being, and we believe corporate profits are likely to slow."
"As a result, we see the defensive sector as a better area to be invested in at the moment – particularly given the poor performance in the last couple of years, which has made valuations very attractive."
Performance of manager vs peer group since Nov-02
Source: Financial Express Analytics
According to Financial Express data, Barry Norris has outperformed his peer group composite by more than 90 per cent since he started his career in fund management in December 2002.