Cash levels have risen, as has diversification and many managers are weather proofing their portfolios.
Colin McLean, CIO at SVM says that the group remains fully invested, but says given the subdued levels of global growth, the firm is increasingly looking for companies that have some sort of restructuring potential.
“We are looking companies where management have some vision for releasing value and where there is, as a result some downside protection in the price you are paying. A good example would be RBS, where you are protected quite a bit by the pricing and there is value there if management can turn it around.”
According to McLean, SVM remains more focused on mid-caps than many of its peers and it is likely to keep its focus there, but it has moved into some of the larger caps where it can see restructuring opportunities.
Asked his view of the move into large caps that has been partly predicated on taking liquidity risk off the table, McLean agrees that some risk can be removed by taking some momentum out of the portfolio, moving from a mid-cap that has done well for a while into a more unloved stock.
But, he cautions: “You certainly take off that liquidity risk doing so, but the large cap stocks are very exposed to global growth and they can do nothing but catch whatever is going around.”
