The Peters Macgregor Global Fund, which was down 0.9 per cent in December compared to a 3.6 per cent fall by the index, has announced that it will revert to its previous cash and global equities ranges of zero to 100 per cent for each.
The decision was driven by the recent, broad economic market which, according to the fund’s managers, would continue to present challenges to valuations into 2019.
This included the decision of the Fed which might have contributed to asset price bubbles, but when markets eventually rolled over, an accommodative Fed would do little to ‘soften the blow’, the manager said.
According to the manager, the current market situation, and the US government in particular – which lowered taxes, increased spending, and pushed budget deficits to unprecedented levels not during recessionary conditions but rather right at the peak of economic activity, but the question should be what governments would do during the downturns.
“We put restrictions on cash a few years back to better articulate to the market our approach. This was in the context of a market environment where we were identifying a larger number of prospective companies,” Peter MacGregor’s chief investment officer, Wayne Peter, said in a portfolio commentary.
Additionally, Peters MacGregor also said that it had made internal changes to its investment team which resulted in reduced coverage of certain names in the portfolio, therefore various positions were exited or trimmed back across the portfolio.
“As a consequence, we’re presently carrying an unusually high level of cash at 70 per cent,” Wayne noted.
“We expect this to be a relatively temporary status as we continue to do work on a number of companies that we’d like to own at appropriate prices.
“Given the precarious market environment we believe we’ve now entered, together with valuation levels that remain relatively high and discount relatively low broad market returns for the decade ahead, time is on our side and patience will – in our view – reward our long-term investors as we seek to deploy portfolio cash into great opportunities.”