MAM Funds is continuing to favour low-risk assets for its CF Miton strategic portfolio and CF Miton special situations funds due to the current market uncertainty.
Managed cash comprises the biggest weightings in the funds, partly due to new money recently coming in. But MAM Funds sees little point in piling cash into risk assets such as equities and are comfortable being defensive, keeping volatility and turnover in both funds low.
Director Martin Gray is not holding any euro-denominated assets in the funds as he sees the outlook for Europe as poor, given the preoccupation with liquidity in the European banking system rather than tackling the solvency issues.
Gray is not particularly bullish about the UK or the US but is less pessimistic about Japan due to increased profit margins, good dividends and the potential for corporate governance to improve. He says Japan is also more dependent on what is happening in Asia, which is one of his favoured regions, rather than the US.
Low-risk assets and Asia are themes that Gray and co-fund manager James Sullivan are playing in their Miton funds. CF Miton special situations is steadily increasing its weighting to Asia but the managers have bought in to money market funds, low-risk sovereign debt and investment grade bonds rather than Asian equities. The fund’s Asian equity exposure is relatively low at around 4 per cent and there is no Asian property exposure.
Gray says: “There are plenty of opportunities to make money but with the potential to panic in and panic out at the wrong times.”