Outgoing Architas chief investment officer Caspar Rock has cut exposure to Clive Beagles’ JOHCM UK Equity Income fund as part of a reduction of his equity positions.
Mr Rock, who runs the six-strong multi-manager range but is to leave the business for Cazenove later this year, said he had been “taking a little bit of money” out of equity strategies following the market rally that emerged in mid-February, while also paring back beta exposure.
“That’s one way to reduce your equity exposure. You can either sell holdings or reduce your beta. If there’s a downside, you should be, to an extent, protected [by doing this],” he said.
“We are taking a little bit of money out of equity following the rally we have seen since February 11. We were neutral equity and we have moved to slightly underweight.
“That’s not just physical, but also the beta of our portfolios. We reduced the weighting [and] played around with the beta exposure in our active range.”
The market volatility that marked the opening weeks of 2016 has prompted some fund selectors to de-risk their offerings by, for example, adjusting equity weightings.
In Mr Rock’s case, he has reduced a “huge holding” in the Standard Life Investments UK Equity Unconstrained fund as well as cutting his position in Mr Beagles’ fund.
He has also moved money into Woodford Equity Income and the Fidelity Moneybuilder Dividend portfolio.
Elsewhere, the manager has made other attempts to position the range more defensively. This includes being “slightly short duration” on fixed income, but continuing to favour gilts.
This has seen him reduce his holding in the Vanguard UK Long Duration Gilt Index fund and add to the BlackRock UK Gilts All Stocks Tracker.
“At the margins, we are slightly short duration,” he said. “We do have gilts and they have done incredibly well. Gilts have protected us where equities have been pretty dismal.”
The manager has also moved to protect investors from a weakened sterling on the back of Brexit concerns.
“Before Christmas, we decided to tweak down our weighting in sterling,” he said. “We were thinking about what the market would think about after Christmas, so we increased our overseas currency weighting.”
This has seen him add to overseas positions, including BGF Asia Pacific Equity Income. He said: “We have been investing overseas. It could be in equity or fixed income. The overall intention was to increase our foreign currency exposure.”
Meanwhile, Mr Rock retains a preference for niche vehicles in his property exposure, in part because he sees risks in the generalist space. His holdings include Empiric Student Property, which was added to the range in recent weeks.
“We have a preference for the more specialist property exposure,” he said. “There’s trouble on the high street, which we have to remember. You also have to remember there’s a lot of supply and high prices in London and the south east.”