The importance of liquidity ahead of Brexit cannot be overstated - Coombs

Added 24th May 2016

“As a total return manager it is not the volatility that kills you it is the sheer drop,” said David Coombs, head of multi-asset investments at Rathbone Unit Trust Management.

The importance of liquidity ahead of Brexit cannot be overstated - Coombs

Speaking at a Brexit briefing in London on Monday, Coombs said the debate remains too close to call to be complacent as a fund manager and, as a result his portfolios are as liquid as possible.

As a result of this, he is invested he said, in gilts, US treasuries, megacap stocks and only the highest quality corporate bonds, from companies like Apple.

He also has 6% and 8% in cash in the Total Return and the Strategic Growth portfolios respectively.

“I want the powder to trade through these markets because it might be the only way I come out of this year with a positive return,” he said.

In the firm’s medium risk portfolio he also has a 25% exposure to the US dollar, which he agrees could be very painful if the UK votes to remain, but he added, should the UK vote to leave the EU it is likely that sterling will weaken significantly in the first 48 hours

“The risk of having the wrong stuff in the event of a leave vote is much higher than risk of missing out on the upside by holding the right stuff if we stay,” he said.

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Geoff Candy

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Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.

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