Investec Wealth & Investment has slashed its allocation to UK and European equities by £430m.
Thie cut represents a 2 per cent reduction the equity allocation of the firm’s balanced portfolio, split equally between the UK and Europe.
The £430m removed has been added to Investec’s cash holding which now makes up 5 per cent of the balanced portfolio.
IW&I’s asset allocation committee has recommended this change due a continuing lack of volatility in equity markets which they reason are due an upward movement.
With its European exposure, the committee made the recommendation for a reduction due to weak momentum in eurozone growth indicators and forthcoming stress tests on banks by the ECB.
Additionally, the committee sees uncertainty adding to the probability of volatility stemming from the base rate being raised in the UK, the Scottish referendum in September and overseas geolitical risk increasing.
IW&I chief investment officer Chris Hills says: “Our judgement is that, in the near-term, sentiment towards UK equities is likely to be affected by the strong pound, which is already acting as a drag on corporate profits, while persistently weak economic growth is likely to have a similar effect on eurozone equities.
“Meanwhile we see fewer reasons for international investors to buy UK and European equities on market weakness, as has been the pattern now for some time.”