City Financial head of multi asset Mark Harris has trimmed back exposure to the US by 1 per cent as he is wary of a potential market correction.
Harris pulled 1 per cent out of the £63m Miton US Opportunities fund, co-managed by Nick Ford and Hugh Grieves, and has instead chosen to place some put options in the market in the event of future volatility.
Harris says: “I do see potential for corrections in the US. I have bought some put options on the S&P 500 to put off some equity beta risk.
“It is like portfolio insurance and, for me, it is about reducing beta through derivatives.”
Separately, Harris sees potential for buying back into emerging markets.
He says: “You should not treat all emerging markets the same and there are some markets we can make a lot of money in.
“With that in mind, we have made a very slight dip into the EM market with an exchange trade fund to buy into the Indian equity market.”
Harris says he is using this ETF while he looks at which active emerging market fund manager to invest with.
He adds: “I am looking at a few emerging market fund managers to include. Maybe a more aggressive Asian equity manager? Apart from that, everything will be left alone.”
Hargreaves Lansdown senior investment manager Adrian Lowcock says: “It is a prudent move as the US is certainly not cheap. It is risky as all it takes is a little bit of negative sentiment and people have a knee-jerk reaction.
“Also, emerging markets are starting to look cheap.
India is interesting as their election is coming up and there is potential for decisive reform if the opposition is elected.”