Premier Fund Managers’ multi- asset team is set to move towards “capital preservation mode” after becoming more concerned about signs of valuation risk in the market.
The team, which manages £846m in assets including the £237.6m Premier Multi Asset Distribution fund, has been reducing risk over recent months through moves such as trimming exposure to small cap stocks and quality-growth equities.
Premier’s Senior investment manager Simon Evan-Cook says: “The interesting thing is how the tone of our asset allocation meetings have shifted over the last year.
“Over the past three or four years, they were about where is the best opportunity to make money and we were able to find plenty.
“The last meeting was more about where to invest without getting exposed to valuation risk.
That is indicative of just how far equity markets have come over the last year.”
He adds the US market has gone from being “quite expensive” at the start of 2013 to “very expensive” now.
“Premier’s multi-asset funds have an underweight to the US but the team is considering reducing exposure further.
Evan-Cook says: “If markets carry on next year in the same way it has this year, to me that looks like trouble. If everything continues to re-rate without companies starting to do well, then there could be trouble. We are just wary we could be entering the last phase of the bull market.”
Hargreaves Lansdown senior investment manager Adrian Lowcock says: “You always have to remember that equities can fall.
“Capital preservation is one of the driving skills of a fund manager. They should be trying to preserve capital first and look to make returns over the medium and long run.”