Having the freedom to reduce risk and move to a more defensive position, holding cash and similar lower-risk asset types, can be valuable during periods where markets appear fully-valued.
As part of our value-driven approach, our fund managers may take what others consider a contrarian view, if they sell into the market’s strength. They often increase holdings of defensive assets when they feel that insufficient upside remains available for the risk being taken.
We believe long-term investors recognise the value of being patient and retaining a defensive stance, possibly for an extended period, when there is an absence of compelling value.
The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.