LONDON (Reuters) – Money manager GMO has cut exposure to equities in some of its multi-asset funds, it said on Tuesday, saying the rebound in stock prices over the past month may have been overly swift given the challenges still posed by the coronavirus.
Ben Inker, GMO’s head of asset allocation, said its $17.5 billion of benchmark-free unconstrained strategies had reduced net equity exposure by 30%, repositioning a significant portion of a long equity position to equity long/short and keeping a 25% long position in emerging market value stocks.
The firm’s benchmark-tracking ‘constrained’ offerings, which have about $12 billion of assets, had reduced net equity exposure by 10% and are now roughly 10% underweight in equities.
“With this much uncertainty, equity markets should be cheap, pricing in a wide margin of safety for risk-averse investors. The recent sharp market recovery gives us considerable pause,” Inker said.
(Reporting by Marc Jones; Editing by David Goodman)
