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How wealth and multi-asset managers are playing a volatile October

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Asset allocators had a torrid time earlier this month as the FTSE slumped below 6,100 for the first time since spring 2013. Here five wealth and multi-managers reveal how they responded.

Rob Burdett, multi-asset manager, F&C

“We have been being tactical over the short term and buying FTSE 100 futures. We do not believe the volatility is over yet so have bought futures rather than funds so we can get in and out of them quickly. We are now 3-5% overweight equities whereas we were neutral before and are underweight fixed income. Over the long term we see these bouts of volatility as opportunities.”

Mike Deverell, investment manager, Equilibrium Asset Management

When everything started dropping we bought a FTSE tracker, which took us back to a neutral position, and then last week we bought another. If the FTSE rebounds to where it has been we will sell again. We hope to make at least a 5% gain. 

“I do not actually think anything is fundamentally different. Some people have downgraded expectations but it is not drastic enough to justify such a big fall. We have gone from underweight equities a month ago to overweight today.”

Jim Wood Smith, head of investment research, Hawksmoor

“We are looking to increase our high yield exposure, we already have 5% in our portfolios and want to increase by a further 2-3%. We would only have a maximum of 10% though. This would be done by taking money out of sovereign bonds, which provide minimal value, and moving it into US high yield where you can get yields of 6%.

“We are also considering emerging market debt, which has a nice yield premium, but it does face problems with currency risk.”

Gary Reynolds, chief investment officer, Courtiers

“We maintain broad diversification in our portfolios and our exposure to the dollar has helped to cushion the effects of some of this short-term volatility. Our equity exposure is currently below the maximum allowed within our funds’ risk profiles so we will look to increase this as opportunities arise. This is not the time to be try and clever with market timing.”

Mark Harris, head of multi-asset, City Financial

“We have taken steps to reduce the government bond exposure and the level of put option protection that we hold. We have also increased equity market exposure through call options but have stop losses in place with a view to reducing the funds’ equity exposure and protecting the portfolio in the event of significant further equity weakness.” 

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