Cazenove head of multi-manager Marcus Brookes is considering raising the cash weighting across the multi-manager range in order to capitalise on volatility in the markets.
Brookes says he is looking at increasing the cash weighting in the diversity income, diversity, tactical and balanced funds, which currently have cash weightings of 8 per cent, 18 per cent, 10 per cent and 7 per cent respectively.
He says: “2011 is looking like 2010 and in May last year, the market fell by 5 per cent. If we believe there is a recession outlook, we will increase the cash weighting in the diversity income fund to 20 per cent, the diversity fund to 21 per cent, tactical to between 40 and 50 per cent and balanced to 15 per cent.”
Last week, Money Marketing revealed that Aberdeen and Jupiter have upped the cash weightings in their multi-manager ranges due to market volatility. Brookes adds that if inflation continues to rise, he may look to buy government bonds, which he considers to be too expensive in the current market.
He says: “One of the things we may see in the next six months is an inflation scare. If that happens, the government bond market may well sell-off and we could buy bonds at a much more attractive price.”