Multi-managers cut cash and make passive move
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Multi-managers are selling out of cash and adding risk through equities and exposure to passives in response to market volatility.
Graham Duce
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% to between 2 and 3%, with the FTSE 100 iShare product largely responsible for the fall.
Graham Duce, the co-head of multi-manager at Aberdeen, says: “With the retreat in markets, this play offers us higher beta returns.”
Robin McDonald, the co-head of multi-manager at Cazenove, says his team has moved from an equity underweight to neutral but add that they remain cautious on markets.
MacDonald says the FTSE 100 iShare represents between 3 and 5% 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.”
David Coombs, the investment director at Rathbones, 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% and 1% position respectively.
Robin Macdonald
In the Enhanced Growth fund, which launched in August, Coombs bought 10% FTSE 100 iShares, 2.5% SPDR S&P 500 ETF and 1% in iShares Brazil ETF. He also added 8.5% in investment trusts to increase his weighting to 15%.
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.”
Ryan Hughes, the head of multi-manager at Skandia, 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.”
James Burns, the head of multi-manager at Smith and Williamson, has sold his 4% 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.
Juliet Schooling Latter, the head of research at Chelsea Financial Services, 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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