Gold now back in Apollo portfolio
Multi-asset firm reintroduces gold into funds and further decreases equity risk.
Apollo Multi-Asset Management’s Tom McGrath has reintroduced gold into the group’s £64.1m Balanced fund.
The manager has purchased a 5.9 per cent position in the precious metal for the fund at what he called a “favourable price after the recent correction”, adding the position had already been positive for performance.
“Our view is that gold does not currently provide the inverse correlation and defensive characteristics we would generally hold it for, but if markets significantly correct again it may well return to this traditional mandate,” Mr McGrath said.
Gold futures have risen less than 3.2 per cent so far this year to take the price to $1,613.5 per troy ounce – less than half the 10.2 per cent rise seen last year and far below the 29.5 per cent rise in 2010.
Elsewhere, the manager said he has bought a Société Générale volatility fund, which he said would insure the portfolio against a sell-off in stockmarkets.
“We expect this holding to provide significant upside if equities sell off and volatility spikes,” he said.
In May, the group adopted its lowest net exposure to equities for a whole year in its Balanced and £53.9m Cautious funds.
The Balanced fund shorted futures worth 12 per cent of
the fund, while Cautious had increased its short to 16 per cent, leaving the funds’ overall net exposure to equities at 36 per cent and 28 per cent respectively.
However, the group has now gone further than this by taking the net equity exposure in Balanced to 33.9 per cent and to 24 per cent in Cautious.
“For the moment we have the funds very defensively positioned with the ability to utilise the highly efficient futures overlay to adjust equity market protection/exposure, as appropriate,” Mr McGrath said.
“Looking further forward, we genuinely believe that at some level over the coming months we will be in a place to move the funds back to a ‘risk on’ stance, but presently it seems prudent to remain cautious yet nimble.”
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