This shift, she said was predicated on the overreaction by markets to the Fed’s first hike in December 2015. However, she added, while the cash pile now looks low, the fund retains a significant holding in very liquid short-dated government paper and cheap protection strategies in the form of a put option on US Treasury futures that she said adds a great deal of nimbleness to the portfolio – a nimbleness that she, like Kemp, Needham and Hambi believe is likely to be crucial to performance in 2017.
This nimbleness is also evident in the fund’s decision to dip into emerging markets for the first time. Following the election of Donald Trump to the White House the market has hit Mexico hard. And, as a result, Hutchins says, two-year Mexican paper looks attractive on a real basis and the currency looks fairly cheap.
“There remain opportunities,” she said, “but you do have to be selective and you have to be tactical.”
To stretch the boxing metaphor the piece started with, the goal for most of the investors to which Portfolio Adviser has been speaking recently is to try and float into 2017 as light and as nimble as possible in order to sting where and when they can.
