Kames Capital’s multi-asset portfolios remain mainly in “long” risk assets says Vincent McEntegart, co-manager of the Kames Global Diversified Income Fund.
The portfolio manager expects returns on most asset classes over the next few years to be modest relative to recent history, so positioning means more corporate bonds (preferably shorter-dated), a trimmed equity risk and more cash.
“Growth is scarce, so growth equities are relatively expensive. Value equities are cheap but lacking a catalyst to re-rate. We have trimmed our equity allocation but remain invested where dividend yield and growth are reasonably priced,” says McEntegart.
The fund’s cash allocation is higher than normal. “We are patient and willing to wait for better entry points to acquire attractive assets.”
“Seventeen trillion dollars of bonds trading on negative yields suggests difficult times ahead,” he tells Funds Europe.
He does not foresee a global recession but thinks today’s geopolitical tensions mean investors are operating in a new paradigm.
“Global trade disputes are a relatively new theme for investors to grapple with and investors should be more cautious than usual about relying on point forecasts,” he says.
Kames’ top-down macro analysis, coupled with bottom-up individual security, “enables us to identify attractive individual opportunities irrespective of the macro outlook”, he adds.
Overall risk levels are at the lower end of the normal range, says McEntegart, reflecting a cautious near-term outlook.
Find out more about how firms are positioning their multi-asset portfolios in our October issue.
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