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Asset Allocator

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Cash levels held by DFMs fall during 2023

Continued disruption in asset markets combined with uncertainty around the prospects for the banking sector prompted Asset Allocator to take a peek at our databases to see what allocations to money market funds look like. 

The most popular money market fund among the allocators we cover is Royal London Short Term Money Market, which is owned by five of the DFMs we monitor. 

One DFM has exited this fund since the start of 2023, while another bought into it at the end of 2022, but otherwise demand for this product has been quite stable. 

The next most widely-owned money market fund among the allocators we cover is BlackRock Sterling Liquidity, which is owned by four DFMs, and had a net of one buyer and one seller since the start of 2022. 

Cash levels in portfolios have generally been falling in 2023.

In balanced portfolios, cash levels are elevated at 3.99 per cent but down from the highs of above 4 per cent seen during 2022.

Among the cautious portfolios we monitor, the average is 9.5 per cent, down a smidge from 10.4 per cent last September. 

As ever there are outliers, with Quilter's WealthSelect range having a stonking 18 per cent in cash, while both Brewin and You Asset Management have 15 per cent allocations there. 

In cautious portfolios, the house with the lowest allocation to cash is Abrdn, with less than 1 per cent allocated there. 

In the income portfolios of the DFMs we cover, the average exposure to cash has dropped from 4 per cent to 3 per cent.

The income guys with the highest allocation to cash is Iboss, at 6 per cent, followed by Schroders  at 5.8 per cent, while at the other end of the distribution, the lowest level of cash in an income model portfolio is held by Close Brothers at 1.7 per cent and Wise, which has 0.5 per cent in cash. 

With markets as uncertain as they are right now, the next few months could see either a rapid rush to cash, or swift whittling down of cash positions as market sentiment improves, either way, we hope to be able to monitor these movements thoroughly.

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