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Multi-managers cut cash and make passive move

Multi-managers are selling out of cash and adding risk through equities and exposure to passives in response to the market volatility.

Both the Aberdeen and Cazenove multi-manager teams have lowered their cash weighting following the fall in markets, with both introducing FTSE 100 iShares into their underlying funds.

Aberdeen has lowered its cash weighting across its £750m multi-manager range from between 5 and 7 per cent to between 2 and 3 per cent, with the FTSE 100 iShare product largely responsible for the fall.

Aberdeen co-head of multi-manager Graham Duce (pictured) says: “With the retreat in markets, this play offers us higher beta returns.”

Cazenove co-head of multi-manager Robin McDonald says his team has moved from an equity underweight to neutral but add that they remain cautious on markets.

MacDonald (pictured) says the FTSE 100 iShare represents between 3 and 5 per cent across the firm’s £680m diversity range.

He says: “The benefit of the FTSE 100 iShare is that it is liquid and can be dealt throughout the day. It also gives us beta exposure to the market. The majority of additional exposure we have is with the likes of Neil Woodford at Invesco and John Wood at JO Hambro.”

Rathbones investment director David Coombs has bought equity passives for the first time in the multi-asset range.

At the start of August, Coombs introduced the FTSE 100 iShares as a new holding into the £51.8m multi-asset strategic growth and £33.4m multi-asset total return funds, making up a 2 per cent and 1 per cent position respectively.

In the enhanced growth fund, which launched in August, Coombs bought 10 per cent FTSE 100 iShares, 2.5 per cent SPDR S&P 500 ETF and 1 per cent in iShares Brazil ETF. He also added 8.5 per cent in investment trusts to increase his weighting to 15 per cent.

He says: “The market is so volatile intraday, passives and investment trusts are the most effective way to get decent exposure at the minute of the day that I want to buy.”

Skandia head of multi-manager Ryan Hughes has also added more global equities to the multi-asset funds during the period of volatility.

He says: “On a medium-term view, equities look like good value so we have been dipping our toe in the water by adding to global equities, topping up the managers that have been hit harder. In the £364m diversified fund, we moved to 1 per cent overweight.”

Smith and Williamson head of multi-manager James Burns has sold his 4 per cent position of cash in his £8m cautious growth fund and has also added to higher beta plays in the £36.4m global investment multi-manager fund.

Chelsea Financial Services head of research Juliet Schooling Latter says: “I am not surprised that some of the multi-managers have taken advantage of opportunities to invest in these conditions.

“Investing in the FTSE 100 iShares makes sense to tap into that bounce.”


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