RWC income team keep high cash weighting but 'optimistic' profit warnings will create opportunities

Cautious of investing 'too early'

RWC's equity income team, led by Ian Lance and Nick Purves, has maintained a 20% cash position on the £370m Enhanced Income fund due to a lack of opportunities, but said the number of profit warnings makes them more optimistic they will soon be able to take advantage of compressed valuations.

The managers have maintained a cash weighting above 20% since May 2015 as they have struggled to find valuation opportunities seven years into the equity bull run. However, they are beginning to see a number of profit warnings in several sectors and said they are more "optimistic" opportunities will start to come through. Lance said: "We are not predicting the whole market falling but we are seeing some individual companies coming down for specific reasons. We are starting to see some profit warnings in the aerospace sector, for example." Rolls Royce issued several profit warnings ...