Speaking in Sydney yesterday, William Blair head of dynamic allocation strategies Brian Singer said the growth of populism has been, to date, the greatest long-term threat to the eurozone.
The Greek Syriza government's decision to default on its IMF obligation, and subsequent referendum, also represented a populist threat to the eurozone.
"Our view was that the German primary objective [in Greece] was to stem the growth of populism [in the eurozone]," Mr Singer said.
Greece, on the other hand, had its own objective – first, to reduce the debt and its austerity burden; and second, to stay in the eurozone.
"It meant in the end it was valuable for all parties to agree to some sort of debt and austerity relief for Greece," Mr Singer said.
"However, it would have to be a pyrrhic victory. It would have to be so grotesquely painful that none of the other anti-euro populist parties across the eurozone would ever want to go that route."
As a result, William Blair is now of the view that "most of the risk is behind us" when it comes to Europe.
"We’re stepping in – we’ve begun buying in the last month. So we’ve now turned the corner and we’re now increasing our risk to Europe," Mr Singer said.
"And the first place that we increased the risk was all of the countries that had populist threats – because Germany won."
Specifically, William Blair is increasing its exposure to France, Italy and Spain, Mr Singer said.
"Those were the places we invested first. We’re continuing to seek opportunity to invest there," he added.
