Sweeney continued: “Although we are less concerned about inflation because it isn’t reaching the end consumer we are increasing diversification in the portfolio.
“We have grown exposure to alternative assets from between 6-8% to 10% over the last two months. For example, we have boosted our exposure to John Laing Environmental Assets [an infrastructure fund investing in renewable energy] from 2% to 2.5% and boosted exposure to Amaedeo Air Four Plus [which acquires leases and sells aircraft] by a similar amount.
“We have also increased our cash holding from 1% to 5% in case we want to buy new stocks. We don’t have any clarity on Trump yet, but there has been some retrenchment in the market and movements in our portfolio reflect this.”
The markets may have settled after a small spike, but investment managers are not complaisant regarding the potential for increased volatility over the coming months.
With put options and alternative funds likely to become more expensive as demand increases, managers should be considering how best to cushion their portfolios as soon as they can.
