Fidelity multi-asset manager Trevor Greetham has cut back his exposure to commodities due to concerns about slowing growth in China.
Greetham has moved to “a slightly more defensive position” across his portfolios following signs that global growth, especially in emerging markets, is likely to be soften over the summer.
He says: “This is a very bullish environment for stocks but at the margin it appears that growth is cooling off a little. We are starting to reduce commodities and commodity-sensitive markets.”
Greetham says one of the areas he is most cautious about is the growth prospects of China, where the authorities have been taking steps to reduce unsustainable expansion in the world’s second largest economy.
The latest Bank of America Merrill Lynch Fund Manager Survey shows a net 29 per cent of asset allocators were underweight commodities in May, which is the lowest weighting to the asset class since December 2008, after concerns increased that demand from China is likely to slow.
Greetham is currently overweight US and Japanese equities, owing to the relative strength of the US economy and the recent monetary and fiscal loosening recently put in place in Japan.
Quainton Hills Financial Planning director Gordon Bowden says: “I tend to recommend some exposure to commodities for most clients, albeit relatively low, but I would not try to guess the market in terms of whether it is a good time to buy or not. Most experts tend not to get their timing right anyway.”