26 October 2017
Peter Elston, chief investment officer, Seneca Investment Managers, comments:
“There’s much talk about when the bull market in equities will end. We believe it will be around 2019, ahead of an economic downturn in 2020, but it’s vital to take action well in advance. Many investors are holding off from reducing risk, presumably waiting until the bull market has ended, but we don’t think that’s the right approach. To be protected when the markets turn, you need to taper your risk ahead of that change.
“This month we further reduced our equity holdings across all of our funds. With a global economic downturn expected in 2020, a bear market will set in ahead of this. We have created a framework to reduce our risk exposure gradually over time to avoid the need for drastic asset allocation changes once the market does turn.
“Our time frame is a very broad estimate and it’s likely that the market changes won’t occur when we expect them to. This is why we are taking action early: we feel in this situation it’s the ‘what’ that matters, not the ‘when’.
“We’re now in a period of monetary tightening across the developed world, which could mean interest rate increases, tapering of asset purchases or balance sheet shrinkage. The US is ahead of other markets in this cycle, however the UK, Eurozone and Japan are not too far behind. Given where markets are in the cycle, equity returns should remain positive but are falling.
“The proceeds of our reduction in equities went into a combination of specialist assets and short duration high yield bonds, which we believe are attractive for the inflation protection and yields they offer.”
Equity allocations now stand at 38% for the Seneca Diversified Income Fund, 56% for Seneca Diversified Growth and 58% for the Seneca Global Income & Growth Trust.
Roland Cross / Alastair Doyle / Helen Cotton, Four Broadgate
Tel: +44 (0) 20 3697 4200
About Seneca Investment Managers
Seneca Investment Managers, based in Liverpool with a national client base, operate a multi-asset value approach to investing. Investors range from institutions such as pension funds and charities, through to financial advisers, discretionary private client managers and personal investors.
Seneca Investment Managers has a heritage stretching back to 2002 and prides itself on the ability to identify and invest where there is both quality and unrealised value.
Past performance should not be seen as an indication of future performance. The value of investments and any income may fluctuate and investors may not get back the full amount invested.
The views expressed are those of the fund manager at the time of writing and are subject to change without notice. They are not necessarily the views of Seneca and do not constitute investment advice. Whilst Seneca has used all reasonable efforts to ensure the accuracy of the information contained in this communication, we cannot guarantee the reliability, completeness or accuracy of the content.
The LF Seneca Funds may experience high volatility due to the composition of the portfolio or the portfolio management techniques used. This document is provided for the purpose of information only and if you are unsure of the suitability of this investment, you should take independent advice. Before investing you should read the key investor information document (KIID) as it contains important information regarding the fund, including charges, tax and fund specific risk warnings and will form the basis of any investment. The prospectus, KIID and application forms are available from Link Fund Solutions, the Authorised Corporate Director of the Fund (0845 608 1497).
Before investing in the Seneca Global Income & Growth Trust plc, you should refer to the latest Annual Report for details of the principle risks and information on the trust’s fees and expenses. Net Asset Value (NAV) performance may not be linked to share price performance, and shareholders could realise returns that are lower or higher in performance. The annual investment management charge and other charges are deducted from income and capital.
This communication provides information for professional use only and should not be relied upon by retail investors as the sole basis for investment.
Seneca Investment Managers Limited (0151 906 2450) is authorised and regulated by the Financial Conduct Authority and is registered in England No. 4325961 with its registered office at 10th Floor, Horton House, Exchange Flags, Liverpool, L2 3YL. FP17/419