The firm reports having become progressively more cautious in its AG Portfolio in recent years, while also fearing the worst following June’s EU referendum result.
“The positive markets have boosted the portfolio healthily since the Brexit vote, although naturally with the reduced volatility that over the past two years has resulted in a far less queasy ride than most indexes,” said partner Mark Smith.
“Indeed with some US markets reaching all-time highs in late September we largely sold out of the US equity market, booking particularly healthy profits in biotech and smaller companies.
“This has been followed in early October with the sale of the remaining long-dated US treasury positions, locking in the near 40% gains since the summer of 2015. We are now almost 25% in cash.”
From a top-down perspective, Smith blamed central bank action as a cause of over 91% correlation between the MSCI’s UK and World stock market indices.
He added: “With European banking woes, global political uncertainty and market distortions growing steadily, we continue to batten down the hatches, watching for a coming storm, fearing that although the timing of the coming tempest is uncertain the longer the wait the worse the outcome.
“We do however also remain vigilant, watching for data that may tell us the turbulence abates, although nothing yet paints that happy picture.”
