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How much cash are these five wealth managers holding?

With some investors anxious about the state of the global economy, we asked our readers how much cash they currently hold.

John Leiper

Head of portfolio management, Tavistock Wealth, London

Investor anxiety is on the rise and not without good reason. The latest Bank of America Merrill Lynch fund manager survey suggests investors have not been this pessimistic about the global economic outlook since December 2011.

Trade tensions, a slowing Chinese economy and global quantitative tightening are significant potential headwinds. As a result, cash allocations are at their highest levels in 18 months at 5.1%.

Moving to cash offers protection but also means giving up yield. We prefer cash “plus” strategies such as ultra-short bonds. These securities provide some protection from rising rates and inflation, while offering an attractive yield over term deposit rates.

We also like US floating rate bonds, given that market expectations continue to lag an increasingly hawkish US Federal Reserve. So while our cash allocation remains broadly consistent with the survey, our 'cash plus' allocation is somewhat higher.

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John Leiper

Head of portfolio management, Tavistock Wealth, London

Investor anxiety is on the rise and not without good reason. The latest Bank of America Merrill Lynch fund manager survey suggests investors have not been this pessimistic about the global economic outlook since December 2011.

Trade tensions, a slowing Chinese economy and global quantitative tightening are significant potential headwinds. As a result, cash allocations are at their highest levels in 18 months at 5.1%.

Moving to cash offers protection but also means giving up yield. We prefer cash “plus” strategies such as ultra-short bonds. These securities provide some protection from rising rates and inflation, while offering an attractive yield over term deposit rates.

We also like US floating rate bonds, given that market expectations continue to lag an increasingly hawkish US Federal Reserve. So while our cash allocation remains broadly consistent with the survey, our 'cash plus' allocation is somewhat higher.

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James Horniman

Portfolio Manager at James Hambro & Partners, London

Cash weightings are at elevated levels across our client portfolios – at around 16% in our balanced mandates – reflecting our caution on both bonds and equities.

No reader would be surprised to learn that we are concerned by political risks clouding the outlook for markets, and given the binary nature of potential outcomes we are comfortable having a high degree of liquidity.

This will enable us to increase market exposure when the outlook becomes clearer and new opportunities present themselves.

A key underweight position is in government bonds across our mandates, reflecting interest rate and inflation risks. Meanwhile, equity markets do look more attractively valued than earlier this year, largely as a consequence of improving earnings growth, but given the potential difficulties ahead we believe it is too early to increase our overall equity exposure.

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Darren Ripton

Head of investments, Standard Life Wealth, London

We currently suspect that this is not the time to build up a war chest. We believe that in this cycle (invariably more than most) time in the market rather than timing the market has been important. 

The concerted and collective uptick in regional growth that we witnessed in the second half of 2017 may have slowed in 2018, but we continue to believe that in areas such as Europe we are witnessing a mid-cycle slowdown rather than the end of the cycle.

We therefore believe that cash should be kept at underweight to neutral levels within mandates and capital should be allocated to assets looking to deliver real returns.

This from an asset class perspective means being overweight equities, with preferred areas being in North America and Emerging Asian equities.

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Gareth Howlett

Investment director, Brooks Macdonald, Edinburgh

We began to increase cash targets selectively a couple of months ago, by adding 2% to target cash levels for “low risk”, “low to medium risk” and “medium risk” clients.

This reflects our view that while equities remain the asset of choice for long-term investors, the risks of a correction have been increasing over the summer.

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Gerrit Smit

Partner and head of equity management, Stonehage Fleming, London 

New inflows into the fund are not allocated to existing businesses on a pro-rata basis – we would allocate it to the best proposition(s) in the fund at that time.

The only reason why we would not do that immediately is if the current macro market conditions clearly argue against that. If so, we may act tactically and with more caution; with new inflows into the fund, some cash can be accumulated on a very temporary basis.

However, we do not believe investors can succeed in timing the market with a short-term tactical trading approach on a sustainable basis. September is on average the weakest month of the year, but this time thus far it is actually a positive month.

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