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Fund firms braced for correction

Miton Optimal and Insinger de Beaufort are becoming increasingly cautious on emerging markets and commodities amid expectations of a short-term correction.

Miton Optimal believes there is a long-term case for these markets but says recent sharp increases have prompted it to take profits and trim the gold weightings in its special situations portfolio.

Its global portfolio has also withdrawn from the Russian market, which rose sharply over the last six months.

Miton Optimal says it will dive straight back into these sectors in the event of a correction.

Director Martin Gray says: “Anything that goes up in a straight line for as long as emerging markets has a liability for correction. The problem is how far away you are from the top. You can either take the profits or run with the pack.

“To some degree, we have to run with the pack but we are more cautious on emerging markets and commodities and are less exposed than we were.

“I have built up cash in our special sits fund to over 25 per cent because I am struggling to find areas of value.”

Insinger de Beaufort says its multi-manager funds are staying invested in emerging markets although it remains cautious. It is also increasing its exposure to Europe.

Director Peter Fitzgerald says: “We understand the concerns about a correction and, although we are cautious, we believe the long-term prospects look quite good.

“Our equity model for UK clients is 60 per cent UK and 40 per cent in international markets. We have looked at the US and found valuations not as attractive as we would like and correlation with the UK is high, so we prefer to allocate money to Europe and Asia.”

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