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London & Capital cuts cash weightings to protect against more market falls

London & Capital is hedging its bets by reducing some of the cash allocation in its managed portfolios to provide protection from any further market falls and allow them to benefit from a bounceback when markets turn.

The portfolios have been defensively positioned in recent months but the firm reduced its cash weightings by half across the portfolio at the start of August.

The cautious return to riskier assets paid off as the portfolios did not experience the full affect of the subsequent fall in equity markets. L&C says the highest-risk portfolio in its range has fallen by around half the fall in the FTSE 100 index, providing a lower level of volatility during what it sees as a short-term correction.

Head of adviser solutions Bruce ElyJohnston says: “We have been able to protect the portfolios from the shortterm sharp increase in volatility. It is important not to lose sight of the fact that these events have happened very quickly and the bigger picture is still looking promising.”

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