Hamish Douglass: Warning signals for investors

Hamish Douglass: Warning signals for investors. In the last week, we have increased the cash weighting in our Global Equity Strategy to approximately 10%. The last time we materially increased our cash weighting in the Strategy was at the commencement of the European sovereign debt crisis in early 2010. We are lifting our cash weighting to increase the defensiveness of our portfolio in response to the massive compression in risk premia across multiple asset classes over the last 18 months. We believe there is an elevated probability that this risk compression will unwind over the next 12 months or so as the US Federal Reserve ends Quantitative Easing (QE) and investors focus on a normalisation of US interest rates. An unwind of the compression of risk premia combined with rising long-term interest rates could lead to a material correction in credit and equity markets. Read more: (VIEW LINK)


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