James Burns and the team at Evelyn Partners have discovered the appeal of cash in their latest portfolio rebalance.
Evelyn has added a significant chunk to its Blackrock ICS Sterling Liquidity holdings across four of its six portfolios as the manager seeks to capitalise on the attractive returns that money market funds have begun to generate.
Regarding the increased allocation to cash, Burns said: "It’s the first time since Active MPS launched that we have made a conscious decision to increase the levels of cash in the models."
The reason he's made this call is that he believes it's the first time in 15 years that cash has offered attractive returns.
In fact the shift is so significant that after having added 3.5 per cent to its pile last week, Evelyn’s most defensive portfolio now carries a solid 9.46 per cent allocation in BlackRock’s money market fund.
To fund the switch, Burns moved further out of corporate bonds for the second time in a month, while picking up slightly more of the Vanguard US Government Bond Index along the way. He also slimmed down Evelyn’s equity exposure.
“The reduction in equities does not reflect a particularly negative outlook, rather an acknowledgement that there is more uncertainty for risk assets and that it was prudent to trim our long-held overweight position,” he says.
“Corporate bonds have become less attractive as credit spreads have tightened to levels that make their protection characteristics in a portfolio less obvious. We therefore reduced exposure to longer dated corporate bonds but retain significant exposure to shorter-dated ones that should fare relatively well in the event of any downturn.”
It’s worth noting that Evelyn’s growth and dynamic growth portfolios remained totally unchanged through the switch, and that no new names were added during the shakeup.
