Baring Asset Management is to launch a retail version of its Dynamic Asset Allocation funds as the manager increases equity exposure in anticipation of a market rally later in the year.
Andrew Cole, who has run the institutional mandate for six years, has increased exposure to equities from record lows, as he says investors will be paid to take on equity risk.
The Baring Multi Asset fund – to be launched next week – will offer “equity-like returns with less risk”, Cole says.
Last summer, equity exposure on the institutional fund was reduced to the mid-teens, although at the start of 2007 it had been as high as 70%.
Cole says: “We have been expecting a recession, not quite as bad as this one, but we have been defensively positioned for the past two years. We have not been frightened of selling down equities but now we think they look reasonably priced. Since October we have been increasing exposure, principally in the UK and in Asia. We are expecting an equity market rally in the second half of the year on the basis that things stop deteriorating.”
Cole adds that his view on the British economy remains downbeat, and the equity exposure is to play the global economy.
Cole has avoided holding assets relating to credit, real estate and hedge funds for the past two years, but
has started selling government bonds to buy corporate credit and global convertibles.
The fund will sit in the Cautious Managed sector and minimum investment is £2,000.