Lumenary Investment Management has reduced the cash weighting on its Global Founders fund by more than half, having previously held more than 50% of the fund in cash as a result of defensive positioning.
A year ago, the high conviction global equity fund held 65% of the fund in cash but this had steadily declined over the last 12 months.
As at 30 September 2019, the cash weighting had fallen to 28%.
Founder and fund manager Lawrence Lam said the decision to be defensive meant the fund avoided the worst of the volatility at the end of 2018. During these three months, the ASX 200 fell by more than 7% while the All Ordinaries lost more than 8%.
“Late last year we decided to hold a large proportion of cash as we prepared for the ensuing market volatility,” Lam said.
“This strategy turned out beneficial as we have since seen a deterioration in market sentiment arising from Brexit, the US/China trade war, Hong Kong protests and concerns around historically low central bank interest rates. The cash has protected our capital and will enable us to proactively capture market opportunities in line with our investment strategy.
“Looking forward, we will continue to deploy capital into areas where we see value - Sweden and UK in particular. Our cash holding is now at 28% and we are well placed to act quickly as opportunities arise.”
Performance of ASX 200 and All Ordinaries indices over three months to 31 December, 2018