Several managed funds of funds are beginning to build up high levels of cash in their portfolios, according to a recent sector report from Standard & Poor’s. Following a strong first quarter in terms of equity performance, the report notes that while several fund managers remain bullish, others have become more protective.Iian Stewart, manager of the Newton Absolute Intrepid fund, is one manager to have increased his weighting in cash. He says this is a means of protection as well as a result of dwindling bond holdings. “We’ve had quite a big cash weighting for a while,’ says Stewart. “And we’ve held no government bonds since the second half of last year. They have been fairly unattractive for a while now. Other funds could be holding more cash in lieu of bonds also.” The Newton Absolute Intrepid fund is run with an absolute return mandate, rather than a relative one, and now has a 75% weighting in equities. “It has been a great time for equities until the last few days. We’ve been surprised how good,” Stewart says. “There has been low volatility in markets and it struck me that was likely to pick up. We wanted to protect against that.” Stewart says because of a combination of the performance of equities and new money into the fund, in the first quarter the Newton Absolute Intrepid fund more than doubled, from 56m to 124m. Similarly, the Jupiter Merlin Balanced Portfolio grew in size by 56% to 75m. According to S&P, it too had a high level of cash in the portfolio, almost 18%. The report says this partly reflects the team members’ view that a short-term correction would be healthy.