The manager of a fund with the word “cautious” in its brand name is living up to its description by keeping exposure to equities low and meanwhile is bullish on the Norwegian kronor, a currency that benefits from the Scandanavian country’s oil wealth.

Olivia Mayell, client portfolio manager of the JPM Cautious Total Return fund, with £660 million (around $1.04 billion) of assets, said she is playing it safe at a time of growing fear of economic crisis in the eurozone.

“The sudden resignation of the chief economist Jurgen Stark [from the European Central Bank] didn’t help the mood but may have been a sign that the ECB may be imminently announcing policy change that he could not support. Mere speculation perhaps, but there is a sense of a looming watershed,” she said.

“The fiscal package announced by President Obama, amounting to £450 billion was greater than expected but generated a shrug by the markets. In such a febrile environment, it is hard to be strategic from an investment perspective. Valuations, while notionally very cheap, may not offer support in an atmosphere of system distress,” she said.

Mayell said there could be a “sudden and massive policy change”, causing markets to lurch “violently”.

“Our approach has been to allocate smaller levels of risk to portfolios and to take a more tactical approach to markets until medium-term visibility improves,” Mayell said in a briefing note.

“With this in mind, the JPM Cautious Total Return fund is cautiously positioned with an equity sensitivity of just over 12 per cent and a duration position of around 4 years. We still have downside protection in the form of options as well as some upside calls in Asia, the region we think is most likely to remain resilient in any rebound in risk sentiment,” she said.

In the bond sector, the fund is long of UK 10-year gilts, as these have been supported by ongoing speculation that the Bank of England will ease credit further through another bout of quantitative easing. The fund is also long in the five-year part of the US Treasury bond market.