GMO slashes equity exposure amid 'out of step' market movements

Better performance from emerging markets

GMO has cut equity exposure across its multi-asset portfolios in response to what the management team sees as overly optimistic pricing in developed markets, which do not offer enough reward for the risk required at present.

After initially adding to risk assets when the coronavirus pandemic began to affect markets in March, Tommy Garvey, member of the asset allocation team at GMO, said the "huge recovery" in markets has led them to "determinately take risk off the table", reducing net equity exposure across benchmark-free strategies by 30% and 10% over benchmark-relatives ones. "Crucially, it is whether you are getting adequately compensated for any risk so that the price of something reflects the potential reward and potential risks," he said. "On emerging markets, we think we are getting paid for the r...