Global funds poised to plough cash into the US
Managers look to redeploy cash into the US.
Two global fund managers last week said they were poised to deploy some of their high cash holdings in the US stockmarket, in spite of fears the country will fall off a ‘fiscal cliff’ in the next 12 months.
Rathbone Unit Trust Management’s (Rutm) James Thomson and Legg Mason’s Ian Edmonds are both holding high levels of cash in their funds - after taking a view that markets could dip in upcoming months.
Mr Thomson, co-manager of the £164.5m Rathbone Global Opportunities fund, said he boosted the cash holding in his fund to 19 per cent of its assets in mid-June, the highest level in three years.
But the manager said he was looking to reinvest some of his cash reserves in growing areas of the global economy such as the US – although growth would be hit if the US’s so-called ‘fiscal cliff’ of expiring tax cuts and spending reductions occurs early next year as planned.
“Of all the markets that I look at, the US is the most likely place I would deploy cash,” he said.
The manager said there was currently a “holding pattern” in corporate spending in the US which needed to be boosted by good results and stronger decisions from company executives.
Mr Edmonds, manager of the £617m Legg Mason Global Multi-Strategy Bond fund, said he holds 12 per cent cash and 15 per cent in other ‘safe havens’ such as treasuries and bunds in the fund.
Mr Edmonds added that he favoured the US but was focusing on bonds with a longer maturity as a “hedge against economic weakness”.
“On the macro side, the US economy is still on track to produce 2-3 per cent GDP growth this year in spite of recent slowing data, with the banks in good shape, the housing market stabilising and energy prices coming off sharply,” he said.