Newton fund manager Iain Stewart has been increasing the cash weighting on his three funds as a result of the lack of safe havens in a volatile market.
Stewart has increased the cash weighting in the £2.5bn balanced fund by 5 per cent to 13 per cent since March. In the Newton £4bn real return fund, the cash weighting is up to 17.3 per cent from 16 per cent and in the £568m global balanced fund, the cash weighting has risen to 7 per cent from 2 per cent.
Stewart has used incoming cashflows to raise the cash weightings in the funds. He says: “Market volatility makes it hard to hedge and so cash has been run up as an effective way to dampen volatility of the funds rather than buying.”
Stewart says asset classes traditionally seen as safe havens may not be so safe in this volatile environment. He says: “The fact that yields on government bonds keep falling has made us wary about adding to that area. In the medium to longer term, I am not sure government bonds are the best place to be.”
BestInvest senior analyst Ben Seager-Scott says: “In such times of market volatility, it is good when managers anticipate a sell-off and stay in cash to protect capital and keep their powder dry to add where there is market weakness.”