Thomson has reduced cash in the portfolio to just 0.64%, its lowest position since he took charge of the fund in 2005. This is down from 1.10% as at 31 October, according to FE data.
He said the fund is also invested in about 60 companies, which is the top end of the portfolio’s 40-60 range.
This is because Thomson said there has never been so many “incredible” and “innovative” companies to invest in across all sectors.
Speaking at the Chelsea Financial Services investment dinner, he said: “I have never been so fully invested.”
Thomson’s view echoes Bank of America Merill Lynch’s latest fund manager survey, which found the average cash balance held by global managers fell to 4.4% in November, from 4.7% in October. BofA ML said this is the lowest level since October 2013 and is below the 10-year average of 4.5%.
However, Thomson added he fears a “stormy” economy looming for 2018.
He warned economic data could soften in the second half of 2018, leading to purchasing managers indices (PMIs) and consumer confidence taking a hit.
He said: “There are so many ideas, yet we will be in for a stormy 2018.”
But, he believes owning quality growth stocks can insulate a portfolio from a struggling economy.
“In a deteriorating economy, we want to own growth. When growth is hard to find people wrap their arms around where they can find it.”
At present, 22% of the fund is in technology. Its top three holdings are Align Technology, Tencent – the fund’s only emerging market holding – and Amazon.
Thomson tends to target large-cap growth stocks with a market cap in excess of $1bn because he said small caps tend to be economically sensitive. More than 90% of the fund is allocated to large-cap stocks.
“Most mistakes I made are in the small cap space,” Thomson said. “It is rare for me to go under $1bn.
“You don’t have to go in at the ground floor.”
