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Home > Investments > Multi-Manager Funds

Multi-asset managers used cash to avoid May chaos

Data shows multi-asset managers navigated the May market chaos by shifting into cash just in time.

By Bradley Gerrard | Published Jun 21, 2012 | comments

Multi-asset fund managers benefited from hoarding money in cash ahead of the May market bloodbath earlier this year, the funds’ latest figures show.

Data from research house Morningstar - which monitors weightings in cash and cash-like assets such as very short-dated bonds - shows that funds in the multi-asset IMA Mixed Investment sectors reported a sharp rise in their cash weightings by the end of April.

In March, the average level of cash in funds in the IMA Mixed Investment 20-60 per cent Shares sector - formerly known as IMA Cautious Managed - was an already-high 11.7 per cent. But by April the average cash weighting rose to 12.5 per cent.

In the IMA Mixed Investment 40-85 per cent Shares sector, formerly called IMA Balanced Managed, cash levels rose from 8.6 per cent to 9.5 per cent.

In the IMA Flexible Investment sector, formerly IMA Active Managed, cash weightings rose from 8 per cent in March to 9.2 per cent in April, on average.

The flight to cash was well timed as May saw markets engage in a broad-based sell off, as the eurozone sovereign debt crisis once again took centre stage and sent risk asset prices plunging globally. The MSCI World index of global equities shed 9 per cent in the single month.

The cash shift also came after markets had rallied in the first quarter of 2012. The MSCI World index gained 11 per cent in the three months, meaning the multi-asset fund managers also benefited from banking previous gains.

The Morningstar data also reveals which multi-asset fund managers have been the most bearish, hoarding large slices of their assets in cash.

Marcus Brookes and Robin McDonald had 21 per cent of their £808m Multi-Manager Diversity fund in cash alone, excluding any other bond assets, as at the end of April.

Multi-manager John Husselbee had 18 per cent in cash in his Way Multi-Asset Cautious Managed fund.

“That has probably come down to roughly 14-15 per cent now, but does include a position in a dollar cash fund,” said the manager.

“We have taken a cautious approach since February and with the high levels of volatility at the moment we are not in a great deal of hurry to change that.”

Tom Becket had a 22.8 per cent weighting in cash in April on his PSigma Dynamic Multi-Asset fund, according to Morningstar. The manager said his weight in cash was 13.3 per cent at the end of April.

The St James’s Place £53m Managed Growth fund, run by Schroders’ Income managers Nick Kirrage and Kevin Murphy, had 22.3 per cent in cash in April, according to Morningstar.

The group’s April factsheets shows a 41.9 per cent total allocation to cash and bonds.

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