Defensive positioning boosts multi-asset managers amid volatile December markets

Investments hit by turbulence

Multi-asset managers who bolstered their defensive positions ahead of the market falls in December have trimmed these holdings and "cautiously" reinvested profits in more cyclical areas of the market such as emerging markets and high-yield debt.

Defensive positioning proved fruitful towards the end of Q4 as markets became increasingly volatile, with the VIX index leaping from 16.04 on 3 December to 35.50 just three weeks later. Indeed, the FTSE All-Share, TOPIX and MSCI World were down by 3.8%, 7.1% and 7.4% respectively over December, heightened by a significant hit to global markets on Christmas Eve, and the S&P 500 dropped 9.2% last month - the worst December for the US market since the Great Depression. Commentators attributed the turbulence to investors' growing concerns over a slowdown in the US - and by association ...