Asset Allocator caught up with Fahad Kamal, the chief investment officer at DFM Kleinwort Hambros recently, and he revealed that while his outfit has increased its allocation to bonds to capitalise on the higher income available, he remains sufficiently cautious on most asset classes that he is running almost 10 per cent cash in portfolios across the board.
In terms of his equity exposure, he says: "We think the UK and Europe are in recession now, and that the US will be in recession next year, and so to be buying equities right now, you need for them to be cheap.
"And we don’t think that in general equities are cheap, but we are overweight to the UK and emerging markets, as they are the exceptions."
He describes his current strategy as "being defensive and waiting for the markets to trough before we step back in."
The other area to which he is significantly overweight is hedge funds, to which he has allocated 10 per cent, split across three mandates.
He says these allocations are used as an alternative to government bonds, and that they "have done very well" this year.