In what the multi-asset fund manager labelled a “classic feature” of markets, he said investors could be at risk of making decisions now, during the optimistic later market stage, which they could ultimately come to regret.
To avoid this, Jane said he and his team were making calls on things that could withstand a market correction and had re-examined the liquidity of investments.
He pointed to a “worry for a long time” that central bank policy was mostly only affecting financial markets rather than the real economy and that this would “ultimately result in capital misallocation and capital destruction”.
He said: “As multi asset investors, we seek to invest in ways that allow for a range of scenarios, and would avoid situations which look good now but, should conditions change, might go badly wrong. There are plenty of opportunities which are attractive, but might be resilient in a less favourable environment.”
The team are more wary of the size of their positions across asset classes amid concerns over liquidity, the fall-back position for investors if conditions change.
“We would not seek to call the top of the market as this phase can persist for several years, particularly as monetary policy, although tightening, remains highly accommodative,” Jane said.
“However, experience guides us to be alert to the potential errors that we might come to regret in the future and avoid situations, which when conditions do change, could go very wrong. It’s the decisions we make now which will determine not only how we do near term, but importantly how we fare when the market does ultimately turn.”
