Short-termism: How multi-managers are protecting portfolios

A growing focus on short-term fund performance combined with shorter market cycles is prompting professional investors to protect themselves by raising cash positions.

Over the past few weeks, industry commentators have noted managers are trading much more frequently in order to capture alpha, as well as placing even greater emphasis on short-term economic indicators.   The sudden moves between risk-on and risk-off have prompted multi-managers to up their cash weightings on fears asset classes are becoming even more correlated as investors chase markets. Multi-managers including PSigma’s Tom Becket, Thames River’s Gary Potter and Cazenove’s Joe Le Jehan are all holding higher than average cash positions to protect portfolios in the event of a market...