The director of strategic alliances at Jupiter Unit Trust Managers argued many fund managers were being compelled by modern theory to “allocate something to everything”, even if there was no credible case to invest in an asset class.
Speaking at the Jupiter Multi-Manager Academy Roadshow in London on 14 October, Mr Carter used the example of a client who is approaching retirement and is invested in UK government yields, even though current returns are below their historic level of 6 per cent.
He said: “Maybe we should challenge the historic view about diversifying across the board. No, you cannot put everything in equities, there has to be balance, but there also has to be an active balance.
“Diversifying can be quite difficult, particularly if we have to make sure that minimal volatility is a primary concern. Clients do not invest for volatility, they invest to make money.”
Referring to the £4.7bn Jupiter Merlin Income Portfolio, he said the management team had constructed a much tighter portfolio that demonstrated its “courage of conviction”.