Platinum International is running its most cautious portfolio in its 28-year history as it is concerned about inflation risks and bifurcation.
In a monthly update, managers Andrew Clifford, Clay Smolinski and Nikola Dvornak said the $7.6 billion fund had seen a strong April which was pleasing given the weak market backdrop.
“It was no surprise to see bond yields rise rapidly and more heat come out of the speculative mania. The surprise to us though, is how long it has taken, having expressed concerns over a bifurcated market, wild speculation and the risks of inflation for some time.
“Taking an alternate view to the crowd is uncomfortable. We strive to protect our investors’ portfolios from permanent impairment of capital but in a rampant bull market, staying the course can be challenging.
“With an understanding from history that when bull markets end, markets tend to give back 50%-85% of the preceding rise, we have the most cautious portfolio positionings in our history.”
The firm particularly highlighted the six major technology stocks which were trading at an average of 28% below their 52-week highs as at 30 April, 2022. None of these were in the fund’s top 10 holdings.
However, it was not all bad news, with the managers saying they were excited by opportunities in the decarbonisation, semiconductors, travel, Chinese consumers and growth industrials.
Its largest weighting was to industrials at 17.8% followed by materials at 16.3% and financials at 13.3%.
The managers had previously warned markets were even more extreme now than before the dotcom bubble burst in 2000.
