Threadneedle goes overweight cash to prepare for equity buying, says CIO Burgess
Mark Burgess, chief investment officer of Threadneedle Investments has confirmed the manager is overweight cash as it prepares for lower equity prices.
It is clear from our recent investment meetings that the risks in the eurozone have increased further from their already fragile position.
The current incarnation of government in Greece has taken a stance in complete conflict with the fiscal compact and unless the position changes, a Greek exit from the euro is now inevitable.
Although we have had a very significant provision of liquidity to the European financial system, it is likely this will lead to some form of corporate failure or failures, the size of which is impossible to predict.
We feel that markets are likely to go lower during this scenario, and have raised our overweight cash positions further by reducing our overweight position in US equities. At some stage equities are going to be a buy, and we would like to have as much firepower as possible to take advantage of the inevitable lower equity prices.