Curtis, manager of the £740m City of London Investment Trust, says: "Value investors are sometimes too pre-occupied with companies, but you can’t sit in the ivory tower. You have to look at the macro."The manager cites the particularly difficult situation in Europe, where European Central Bank (ECB) president Mario Draghi has continually hit a “barrier” of countries in the north of the continent who do not want to be held responsible for the debt burdens of their less productive neighbours in the south.
"These are mechanisms needed in a proper currency union in my opinion," Curtis said. "It doesn’t feel as though there is much light at the end of the tunnel. It’s quite a serious situation in the eurozone."
The manager believes there is some hope for the wider economy, provided the US is able to come to an agreement on the upcoming “fiscal impasse” at the end of the year.
However, the manager remains cautiously positioned as headwinds fail to abate.
"I’m a conservative investor and quite a conservative personality," he added.
Curtis has tipped the portfolio towards companies with global exposure in an effort to increase diversity, but remains primarily invested in the UK.
"I’m currently holding 7 per cent in international and I can go up to 20 per cent, but I’m struggling a bit with the eurozone crisis and that has been right to hold back a bit," he said.
"I would only turn to international holdings for extra diversity or if I felt I could add value over the UK market."
Despite his conservative view, the fund is currently overweight cyclical stocks, though underweight banks, miners and oil.
Among the trust’s top holdings are stalwart blue chips British American Tobacco, Diageo and GlaxoSmithKline.
"The best investment of my career has been British American Tobacco," Curtis continued.
He adds that equities as a whole are much more attractive than fixed income in the long-term.
"It’s a no-brainer that equities have to be better than fixed income. On a long-term view I am confident equities are absolutely better."
The five crown-rated City of London Investment Trust has returned 146.19 per cent over 10 years, compared with 133.87 and 117.7 per cent from the IT UK Growth & Income sector and FTSE All Share index respectively.
The trust is a top-quartile performer over five years, returning 36.46 per cent compared with 2.79 per cent from its sector. The FTSE All Share returned 11.3 per cent during this time.
Performance of trust vs sector and index over 5-yrs
Source: FE Analytics
While the trust has outperformed over the long-term, Curtis says: "Dividend growth is the most important metric we’re looking at."
He points out that the trust has a 46-year record of annual dividend increases, the longest of any closed-ended fund.
"Investment trusts, unlike open-ended funds, don’t have to distribute all their earnings in one year; we can hold some back," he said. "The money we didn’t pay out, we put in revenue reserves so you can save up for a rainy day."
The trust is currently yielding 4.44 per cent, with a total expense ratio of 0.45 per cent, the lowest in the AIC Income & Growth sector. The trust’s gearing is currently 7.7 per cent, down from 10 per cent a few months ago.
Curtis expects the level of gearing to increase as long as the economy continues to tick along.
He says the fund has been trading at a premium for the past three years and has issued roughly £100m in new shares over the last two years, which he says is "quite unusual for an investment trust".
Curtis has outperformed his peer group composite over three, five and 10 years. As the value style of investing has fallen out of favour in recent years, he has lagged the peer group composite over the shorter term, returning 14.4 per cent over one year, while his peer group has returned 16.8 per cent.