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T Bailey sitting out turbulence in cash

The T Bailey growth fund is holding cash for only the second time in almost seven years because the managers say the markets are currently so difficult to call.

Managers Jason Britton and Richard Martin prefer the fund to be fully invested but have built up a 7.5 per cent weighting in cash after reducing an overweight position in emerging markets after the recent sell-off.

T Bailey is still upbeat on emerging markets in the long term but its exposure is now more in line with the fund’s benchmark. The managers are still deciding where to reinvest the cash balance but say the holding will only be a short-term measure.

The company says that a lot of multi-managers go overweight without any benchmark constraints in sectors that are performing well in the short term.

However, T Bailey says it prefers its underlying managers to be free from constraints while its own asset allocation decisions are based on not straying too far from its benchmark. It says this approach has helped the growth fund outperform its benchmark every calendar year since launch.

Britton says: “Over the last seven months, the fund has been outperforming a number of our high-profile competitors. This is down to the type of fund we have. Our benchmark constraints have helped the fund perform well in the market shake-out.

“We have our own benchmark positions so we would never hold 30 per cent, for example, in one sector. We like managers who are unconstrai- ned but we recognise that risk control is important. We are not trying to take big bets, it is about not going too far.

“We have invested in a bit of cash, just while we see how the market goes, but we are looking to put it back into the market. I would rather do that than chop and change. I liken this summer’s market to a snowstorm. It is only recently that the picture has started to get a bit clearer.”

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