Investments  

Frikkee: tactical use of cash can shield against falls

Frikkee: tactical use of cash can shield against falls

Smith & Williamson fund manager Tineke Frikkee has said the tactical use of cash can cushion a portfolio from market falls.

The manager of the £44m Smith & Williamson UK Equity Income Trust ran up cash positions last September ahead of October’s market correction as well as in December, when the fund held 14 per cent in cash.

It is currently holding 12 per cent in anticipation of another fall.

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Ms Frikkee said: “Flexible use of cash in a see-saw market such as this can help cushion the portfolio from markets falls.

“I don’t want to hold large cash positions over long periods, as this compromises the fund’s yield objective. However, tactical use of cash can support overall returns in a volatile market.”

Adviser view

Jaskarn Pawar, an adviser with Northampton-based Investor Profile, said that the tactical use of cash in a portfolio “is quite a big call because historically in the stock market gains come in big chunks, so good days are really good days and if you are in cash then you have lost a lot of gain.”