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Correction protection: Marcus Brookes lifts cash to near record

by Eleanor Lawrie on Feb 05, 2014 at 11:00

Correction protection: Marcus Brookes lifts cash to near record

Schroders multi-manager head Marcus Brookes (pictured) is close to his highest ever cash weighting in the £1.3 billion Multi-Manager Diversity fund , warning the bull market could end ‘when people aren’t expecting it’.

Speaking to Wealth Manager before concerns about the US economy sparked a sharp downturn in markets this week, Brookes said Diversity currently has a cash weighting of around 30.6%, up from 25.5% at the end of last year. 

While Citywire A-rated Brookes has concerns that the bull market could end when people least expect, he stressed: ‘I am not saying this is the end of the bull market.

‘If I get caught underperforming in a market that looks expensive, I will feel I have let my investors down,’ he added.

Around 8% of that cash weighting is in dollars, as the team expects the currency to benefit from the US Federal Reserve’s tapering of asset purchases.

‘One of the problems investors now have is that data is supportive of a risk-on environment. It’s supportive for high yield, emerging market currency and debt, but at  the moment those assets are not going to perform well,’ Brookes said.

‘We are looking at the world in a different way to normal. We think the dollar may well strengthen as less QE is expected. The day the US raises interest rates has been brought forward because of good economic data.’

Performance drivers

The Cazenove multi-manager team, which also includes Robin McDonald and Joe Le Jehan, runs a combined £2.5 billion in assets. Over the 12 months to the end of November, all but one of the funds in their seven-strong range were top quartile.

To the end of last year, the Diversity fund was top quartile over three years and second quartile over one, with a return of 10.8% compared with 8.8% for the IMA Mixed Investment 20-60% sector.

Cazenove’s strong presence in the multi-manager space is likely to have proved a key attraction for acquirer Schroders.

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