Dixon stated: “While we too favour UK and European equities over those in the US at present, we are taking a more cautious approach more generally.
“More broadly, markets look fully valued by comparison to historical norms. Bonds, which are traditionally used to reduce risk and aid diversification, currently offer very low yields by historical standards, and bonds currently bear elevated capital risk.
“As a result we have increased cash weightings in our Core and Select Portfolios – an approach that seems prudent when such valuations are prevalent.”
Dixon also cited rising inflation, the prospect of “stunted wage growth” and the uncertain political situation in the UK as reasons for erring on the side of caution.
“A rise in inflation and stunted wage growth signal a warning for financial advisers and demand a higher margin of safety as the volatility of the pound and political strain continue to pose a risk,” he stressed.
