Nervous about the fate of parts of the technology sector, Axa Investment Managers’ Jeremy Gleeson has begun cautiously deploying cash, which recently reached its highest level in his portfolios since the financial crisis.
Mr Gleeson, who runs the £251m Axa Framlington Global Technology fund, is typically more reticent than peers to allocate to the asset class, but had more than 5 per cent of his vehicle in cash at the end of July.
This compares with a typical position of around 2 per cent.
“We thought it best to be more prudent in our portfolios and so we have been taking some names out and reducing others,” he said.
The manager said his fund last held such a weighting in 2008-09. He has since pared it to 4.5 per cent.
After several years of strong returns, technology stocks whipsawed last month amid the wider sell-off in US equity markets.
The Nasdaq index initially fell by as much as 8.8 per cent in the final week of August before ending the month 2.6 per cent higher.
This valuation upheaval encouraged Mr Gleeson to reinvest in certain companies, specifically the larger-cap names he felt would be quickest to recover from the turmoil.
He bought more of Adobe, Cisco, Google and Salesforce.com last month.
In spite of the sell-off being triggered by concerns over China’s economy, the manager is still maintaining a positive stance on his two Chinese positions.
Mr Gleeson holds two Chinese stocks: web services company Baidu and media and internet services conglomerate Tencent.
“We are firmly of the belief these companies are high-quality businesses with good management teams, and they have a strong market share within their relevant markets,” the manager said.
He acknowledged that he was monitoring these stocks closely given the current environment in the country.
The manager explained: “With the backdrop in China there are some risks with these names because of their association, so we are a bit nervous. However, we aren’t nervous enough to do anything yet.”
Mr Gleeson added it would take a breakdown in the companies’ fundamental businesses, a dramatic deterioration in growth or a significant change to business models for him to dump these stocks.
One area in which he has been steadily reducing exposure is the semiconductor and semiconductor equipment sector.
The manager said he had been overweight the space for “quite some time”, but more recently he felt the market had “caught up with our thinking, and valuations are starting to look a little stretched”.
Mr Gleeson has also been paring his holding in Apple, from a high of more than 9 per cent at the start of the year to its current level closer to 8 per cent.
However, he maintained there is “a lot of good news” surrounding the company and remains optimistic about its product pipeline.