Architas multi-manager Caspar Rock has reduced the size of his asset class bets on the view the investment outlook is less clear cut.
The chief investment officer, who runs the group’s active, blended and passive multi-manager ranges, said he had held “quite big bets” in asset classes in terms of overweight and underweight stances, but had recently been “reducing the amplitude” of these positions.
“It is not so glaringly obvious that there are sharp differentials between asset classes,” he said.
In fixed income, Mr Rock said he had been “extremely underweight” in terms of his exposure to the sensitivity of rises in interest rates – known as duration – but had been buying gilts with a longer life-span recently.
The move suggests Mr Rock expects any rate increases to come later rather than sooner, as longer-term gilts are more likely to be impacted by a rise in rates.
He said in equities he had also been reducing exposure to Europe and the US – where he had been overweight – and recycling the proceeds into areas where he had less exposure to, such as Asia and emerging markets.
Mr Rock had also taken what he described as an unusual step in July and built up cash weightings in his active and blended fund ranges. “Historically, we don’t carry cash in these ranges but it rose to between 5 and 8 per cent,” he said.
“There was a unanimity of view in the market that everything was positive and that worried me. When everyone is bullish, I decided to take some exposure off the table.”
The move proved beneficial because markets globally took a dip in early August as tensions between Russia and Ukraine heightened.
Mr Rock said he had now reinvested some of the cash into areas such as emerging markets and Asia, as well as into property. His favoured funds in this space include the L&G UK Property fund, the Threadneedle UK Property Trust and F&C UK Property fund.
He said he had also been adding to more specialised property funds, including the Custodian real estate investment trust and the F&C Commercial Property investment trust.
Cash in the group’s blended range is now closer to 4-5 per cent, while in the active range it is closer to 2-3 per cent.
Elsewhere, Mr Rock said he had “completely switched” out of the Royal London Sterling Extra Yield fund in his active range in favour of the Ubam High Yield fund.
He said the Ubam fund held derivatives rather than actual bonds, meaning it was more liquid and would be easier to sell if investors started exiting fixed income en masse.
