Troy Asset Management’s Sebastian Lyon and Francis Brooke have reduced long-standing holdings in their £85.9m Spectrum fund and recycled proceeds into cash.
Positions in the Ruffer European fund, one of the portfolio’s largest investments, and the Polar Capital Global Insurance fund were brought down during November.
Cash in the portfolio has been boosted by the sale of these holdings, with cash levels now standing at over 23 per cent including cash controlled by underlying managers.
In their latest update, the managers say: “Ruffer European is an eclectic mix of smaller companies whose profitability is divorced from the diktats of central bankers.
“By contrast, however, their valuations are now stretched by more positive stock market sentiment, and so we have prudently reduced our holding.”
The update adds a similar increase in valuations within the insurance sector prompted a reduction in the Polar Capital Global Insurance fund.
It says: “Like Ruffer European, this is an unusual fund whose investible universe of companies no longer has the discount that first attracted us.
“The balance between risk and reward is no longer so clear after a 55 per cent return in two years.”
Whitechurch Securities head of research Ben Willis says: “There are a number of managers who do not see lots of value in the market.
“There is also still a lot of uncertainty around tapering this month and although I think it is unlikely this will happen, I can see why this might make managers hold cash.”