Steep valuations force Grender to keep 20% in cash

Gordon Grender, manager of the GAM North American Growth fund, is holding a fifth of his portfolio in cash as he struggles to find attractive valuations in the US market.

The S&P 500 and Dow Jones indices have repeatedly broken through record highs this year, rising by 15.5% and 17.2% respectively year-to-date. With US companies trading at historically high multiples, US equity investors are not finding cheaply-valued companies in which to invest.  “Good companies are selling at 25x P/E ratios and, as long as interest rates remain low, this is unlikely to change,” Grender said. “I have around 20% in cash at the moment and this is a high allocation for my portfolio historically. Some of this has come from new inflows, but I have also held some stocks...