A little caution needed
Alec Stewart, CEO of Anderson Strathern Asset Management is one of those who are cautious on jumping headlong now into safe haven assets.
“We have been a bit uncertain about gilt valuations for a while. And, without wanting to push investors up the risk chain unnecessarily, I would question how defensive a lot of so-called defensive assets are at present,” he said.
As a result, while he admits that there are certain UK-centric stocks where one would want to exercise caution and do a lot of homework, he said: “I would also caution against a headlong rush into safe-haven assets now.”
Instead, he said, the firm is currently overweight phiscial property, corporate credit and within its equity portfolio, has a tendency for global equities. But, within its UK holdings, it is weighted toward the larger commodities players.
Coram Asset Management director, James Sullivan said took a slightly different view, but agrees that there are opportunities to be had in the current volatility.
While the firm had done little in direct relation to the vote as, he said, the firm didn’t know what the outcome would be, the firm’s funds benefitted from its positions in the dollar, yen and Singapore dollar as well as its gold holdings.
But, he added: “The referendum result was a wonderful example of an event not ‘being priced in’ and we took that opportunity to increase exposures to risk assets across all three portfolios.”
In particular, he said, the firm has added to UK equity with a bias towards value; European equity with the DAX on 13.5x P/E; and developed our position in Land Securities.
And, while Sullivan argues that “rotating cash-like assets into risk assets at materially lower levels is very rewarding over the longer term”, he acknowledged that even with the falls seen on Friday, valuations remain at elevated levels. .
“We feel that there is more downside to come in the equity markets, but we can’t be sure if that’s tomorrow, or over the next quarter. So why have we increased risk at this stage? We’d rather be early for the boat than miss it altogether,” he said.
