The trust is planning to reduce its neutral position in US equities to an underweight on the belief the economy is now in an “expansionary” phase where higher interest rates will hit equity markets.
Seneca’s chief investment officer Peter Elston, said the expansionary phase sat between the ‘recovery’ phase currently in action in the UK, Europe and Japan and the ‘peak’ phase.
He said: “We’re at the point in the cycle when equity returns should start to fall, albeit remain positive, and the move to zero weight in US equities is consistent with the reduction in the Company’s overall equity weighting over the last year.
“Having moved from overweight to neutral, we are planning to move to an underweight position in equities, starting with the US.”
Elston added it was “more a relative call than an absolute one” as US equities could continue to rise.
However, he added the reduction is also based on the belief that the US dollar has turned – the possibility of interest rate increases in the medium term in other developed markets such as the eurozone and the UK argue for strength against the US dollar in other currencies.
“As active managers, it’s essential we take high conviction positions to provide our investors with products that have the potential to deliver strong performance after fund costs.”
