The firm’s multi-manager team, headed by John Chatfeild Roberts, has stripped back cash weightings on its £1.5bn growth portfolio from 11.2% to 7.4% and decreased its cash holdings from 12.3% to 7.8% in its the £1.2 billion balanced portfolio.
Jupiter said it was minimising the fund’s exposure to financial corporate debt and advisers agree Jupiter’s move to lower cash holdings seems guarded yet opportunistic at the same time.
Chelsea Financial Services’ head of research Juliet Schooling Latter believes the markets are at a reasonable low point for some investors to drop some cash and drip-feed into the markets.
“They are still holding some cash, so they are still holding fire if the markets go down even further,” Schooling Latter said. “The problem for many investors is that the current climate is so volatile. Jupiter’s seems a sensible approach for them.”
Honister Partners’ chartered financial planner Geoff Penrice agreed.
“The team at Jupiter Merlin has always tended to have a dynamic view of tactical asset allocation,” he said. “Rather than just benchmark, John Chatfeild Roberts and his team will take a position if they see opportunities.”
Penrice believes with the falls in the markets there may be some buying opportunities, and even if the timing is not perfect, Jupiter would try and tap into where they saw medium and long term trends to find returns.
“Cash rates are very low and seem likely to remain low for some time,” he said. “Having between 10% and 12.5% in cash is a defensive position and I am sure this was allowed to build up while they were waiting for the right opportunities.”
Informed Choice managing director Martin Bamford suggests the move is more about their position on debt than on opportunities.
“The decision to reduce allocations to cash across the Merlin fund range appears to be due to their views on corporate debt rather than taking a positive stance on the value of risk assets,” he said. “The consequence of cutting corporate debt exposure will be re-entering the stock markets at what is likely to be viewed, in the future with the benefit of hindsight, as a savvy timing move.”
Bamford said advisers typically excluded cash from their portfolios.
“Even with reduced exposure, seeing cash balances of 7-8% in the Merlin funds may give some advisers cause to reconsider their stance on cash,” he said. “Cash can play an important role in a well diversified portfolio, with the risk reducing features of this asset class often more important than the potential return available.”