Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Eight wealth managers on how much cash they hold

With equity markets globally continuing a three month tug-of-war it is clear neither bulls nor bears hold a steady advantage

Following a turbulent Q1, portfolio managers around the world held an average 5% of assets in cash last month according to the BoAML fund survey.

That was 0.4% higher on the previous month, with equity risk hedging at an 18 month high, according to the bank.

With equity markets globally continuing a three month tug-of-war it is clear neither bulls nor bears hold a steady advantage in this debate, however. So how much cash are do our readers hold?

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Following a turbulent Q1, portfolio managers around the world held an average 5% of assets in cash last month according to the BoAML fund survey.

That was 0.4% higher on the previous month, with equity risk hedging at an 18 month high, according to the bank.

With equity markets globally continuing a three month tug-of-war it is clear neither bulls nor bears hold a steady advantage in this debate, however. So how much cash are do our readers hold?

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Guy Stephens

Technical investment director, Rowan Dartington, Bristol

While it is tempting to run cash at higher levels as we approach May, the reality is that there remains too much liquidity around chasing too few asset classes.

Only those feeling suicidally bearish are bold enough to underweight equities in favour of other low volatility, low return, high certainty asset classes. 

With strong coordinated global growth it is a brave or highly speculative investor who chooses to keep to the sidelines with elevated cash. 

The bounce from the February sell-off shows that most equity investors are refraining from selling or looking to buy on weakness.

Very few are expecting the end of the bull market this year.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Ben Ward

Senior investment manager, Standard Life Wealth, London

With low deposit rates, cash does not provide a meaningful absolute return, but it does offer optionality.

We believe that traditional portfolio theory may not be as effective as it once was, with safe haven assets such as government bonds less effective at providing diversification in times of market volatility.

Cash may not have a materially positive impact in these times, however having it to invest can be very valuable.

We continue to favour equities, however we remain mindful of heightened market valuations and the potential for bouts of volatility. For example, at the turn of the year we let cash build with the market strength. It is easy to say cash gives optionality, but only if you invest it.

In the first quarter we took the opportunity to add conviction to our favoured holdings such as Treasury Wine, Covestro and Estee Lauder.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Jordan Sriharan

Senior portfolio manager, Thomas Miller, London 

Having moved into 2018 with an overweight cash position, we used the sell-offs in early February and late March to add to equity markets where we were underweight. 

This brought the model portfolios to a slight underweight cash position as the financial year end passed.

At this stage of the cycle, we continue to believe that being overweight equities is the correct position. We remain prudent, however, and will dial down risk as valuations become stretched, as they appeared to be in the later months of 2017. 

In recent days, we have sold down a small allocation to equities to bring the cash allocation back to neutral. As volatility picks up, the opportunity to sensibly utilise cash will pick up too.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Scott Wylie

Investment manager, Mattioli Woods, Glasgow 


Our natural position within client portfolios would be to remain fully invested, although we will raise cash tactically when we feel it is warranted.

One such example was ahead of the EU referendum when we took cash up to near 20%, although this was quickly reduced when it became clear that overseas stocks would benefit from a weaker sterling and that Armageddon was unlikely to come to fruition following the result.  

At present, we retain higher than average cash levels, given our cautious view on the short-term market outlook. This graduates from 14% in our more defensive portfolios, 8% in cautious portfolios, 4% within balanced portfolios, and reducing to 1% for our most adventurous portfolios.  

Not only did this strategy protect us during the market falls in February and March of this year, but gives us the opportunity to take advantage of lower priced assets should we feel this to be appropriate. At present, we are holding fire.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Fahad Kamal

Senior market strategist at Kleinwort Hambros London

Across most mandates at present, we hold slightly elevated cash positions, but for balanced clients, this would still constitute less than 10% total portfolio allocation.

Nonetheless, it is important to put cash in context. To many, it represents an opportunity cost, an opportunity lost. These investors believe cash is a temporary holding medium between risk-assets, held unwillingly, often for a lack of better ideas. That is a limiting, myopic view.

Cash is a core asset class, not just a blank canvas from which to make other investments. Sometimes – even over long periods – it is a better investment than equities or bonds.

Most times, even if it underperforms, it still delivers positive, real returns with little risk – a unique, compelling trait of tremendous value.

Indeed, in the only completed decade of this century (i.e. the noughties), cash outperformed equities in real terms. Pretty good, especially to those with a recency bias!

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Andrew Powell

Investment director at Walker Crips Epping

Within our model portfolios our levels of cash are generally below 10% at the moment. Some valuations look a little stretched and there are various geopolitical tensions that may cause volatility, but we can't see much on the horizon likely to knock us completely off course.

The IMF has released its latest forecast for global growth to reach 3.9% and the recent weakness in the US and Europe has been seen as a buying opportunity. 

Our clients are generally entrepreneurs, business owners or those who have recently sold a business, looking for a return on funds not used in their day-to-day ventures.

We like certain domestic equities with a global presence such as HSBC and Prudential, as well as Diageo for their exposure to the Far East and Asia. 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Phillip Wong

Investment manager, Redmayne Bentley, Leeds

As part of a diversified asset allocation strategy, I prefer to run no more than 5% in cash with current levels running at 3%.

There is empirical evidence to suggest that investing over the long-term will produce a positive outcome for investors with a reduced probability of loss across the years.

Indeed, the buy and hold strategy, as adopted by Warren Buffett, gives credence to this approach. Timing the market, as most professionals will admit, is notoriously difficult to call.

With this in mind, if I can position portfolios in quality investments that look reasonably fair value, the issue of timing the allocation of cash into the market will become less paramount.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

Niall O’Connor

Deputy manager of the Brooks Macdonald Defensive Capital fund

We increased cash levels to close to the 10% mark and have held them there for the last half a year.

Our reasons for running higher levels of cash than in the past are two-fold. Firstly, although our good past performance means that we have continued to see strong inflows, adverse market conditions could lead to our investors moving more to cash themselves, potentially leading to outflows.

As an open-ended fund we keep a small buffer to meet redemptions to avoid becoming a forced seller of assets.

Secondly, at some point in the (possibly near) future other market participants may become forced sellers, and we want to keep a “war chest” to enable us to take advantage of any pricing anomalies that may arise.

We can avoid 'cash drag' by skewing our assets slightly more towards the higher risk/return end of the spectrum, whilst still maintaining a defensive overall portfolio.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Your Business: Cover Star Club

Profile: Kevin Doran's formula for success at AJ Bell

Profile: Kevin Doran's formula for success at AJ Bell

From a degree in theoretical physics to teaching and becoming one of the youngest chief investment officers in the UK, Kevin Doran has certainly had an interesting career.

Wealth Manager on Twitter