Many professional and private investors have upped their exposure to Europe in recent weeks, looking to cash in on cheap valuations and improving sentiment.However Andrew, a multi-asset fund manager who currently has 40 per cent of his portfolio in equities, sees no value in holding "risky" European equities or bonds.
"Stocks tend to be on discounts because there are things to be genuinely concerned about, or because investors are fearful of something that doesn’t materialise," he explained.
"If we look at the facts, with regard to Europe I am in the first camp."
"Until recently there were justifiable worries from many quarters about the euro collapsing and I think this risk still remains."
"Since Mario Draghi [president of the ECB] said he would do 'whatever it takes' in the summer, people have been a lot more positive. My confidence in the durability of the euro increased, but not as much as the market’s."
"Draghi didn’t tell us anything about which countries would be playing the game, or any other specific details."
"My fund is all about growing a distribution while not losing investors' money. I don’t see the need to get my hands dirty in Europe when there are opportunities elsewhere."
Andrew has had nothing in European equities or debt since May this year, and says there would have to be radical changes for him re-consider this approach.
"First of all, I’d have to see the Italians and Spanish reach an accord with the ECB over their budget, but given they haven’t even started, this won’t happen anytime soon," he explained.
"Secondly, there would have to be a far more unified, draconian fiscal philosophy at the core of Europe."
"Either these two things have to happen, or prices would have to be significantly more attractive, which would mean falls."
Andrew is value-orientated, putting most of his effort into finding bargains rather than a short- or medium-term outlook.
"We constantly look at the buying price and what characteristics we get in terms of income stream and capital value."
"It is very different to know where any asset class is going in the medium-term, and certainly the short-term, but you can be assured about the price you buy at."
The manager says buying an equity should be approached in exactly the same way that consumers buy any household product.
"If you see a TV on a 20 per cent discount, it increases the likelihood of the person buying it, but for some reason the opposite is true when it comes to the equity market," he explained.
"When investors see something is cheap, they are immediately put off. However, if you like the underlying attributes of the company, then getting it for a cheaper price should be looked upon as a positive thing."
"If you like something that is cheap, you should buy it rather than worrying about providing justification for its inclusion."
"We are not genetically disposed to do the opposite to what everyone else is doing. It’s our job to try and challenge this."
The manager sees far more value in the US and recommends that investors buy in during blips in the market if worries over the fiscal cliff endure.
He commented: "We had similar worries 18 months ago with the threat of US government shutdowns, but that never materialised."
"It is in the nature of the US partisan system to leave everything to the last minute. Nothing tends to happen until someone is forced."
"Worries over the fiscal cliff could have an impact in the shorter term, but if it is, I’ll be buying into it."
When asked what equity market is currently the cheapest, with a great deal of conviction Andrew said: "China, for sure."
MSCI China is down 9.13 per cent over two years and is also one of the few equity markets that has lost money over three.
Performance of indices over 3-yrs
Source: FE Analytics
"Earnings in China have actually been very good, but this hasn’t been reflected in performance," he continued.
"Figures looked robust in 2011, but the market has continued to underperform."
"By a large margin, it is the cheapest market that’s reasonable to invest in."
Andrew has recently upped the Chinese equity weighting in his portfolio to 3 per cent and he also has indirect exposure via China Mobile and Bank of China.
The £120m M&G Episode Income portfolio is up 14.05 per cent since its launch in November 2011, beating its IMA Mixed Investment 20-60% Shares sector by around 8 percentage points, albeit with more volatility.
Performance of fund vs sector since launch
Source: FE Analytics
Andrew currently has 40 per cent in equities, split between the UK, US and Asia Pacific. He has a further 48.9 per cent in bonds, predominantly government debt, 8.6 per cent in property and 2.5 per cent in cash.
The fund is currently yielding 3.74 per cent, has a minimum investment of £1,000 and a total expense ratio (TER) of 1.61 per cent.