Thesis cuts exposure to UK and Japanese equities as caution on global growth builds

Thesis Asset Management has cut its exposure to both UK and Japanese equities in light of recent market volatility across its seven-strong range of model portfolios.
Equity markets have been turbulent, with the FTSE 100 down almost 14% from its highs of a year ago, despite a 10% bounce from its February lows.
James Nield, investment manager at Thesis, said the investment team had used the recent bounce in markets to trim equity weightings across portfolios.
The investment manager has cut around 2% from each of the UK and Japan, taking cash weightings back up to between 6% and 12% across the seven risk mandates.
“We have become more cautious about global growth and as such are more concerned about the sustainability of corporate earnings”
Thesis has sold the Man GLG Japan Fund entirely, leaving a Nikkei 400 ETF and J O Hambro Japan (hedged) to make up, in equal weightings, the firm’s entire exposure to the sector.
“A 2% cut represents a near halving of our Japanese exposure, whereas our decision to cut 2% from the 30-40% weighting in UK equities is of less significance relatively.”
Nield said the team had decided to trim its UK equity exposure on a short term, tactical basis.
“It is difficult to see the UK market rallying substantially from here with the Brexit vote pending. On this front what has really driven our decision with respect to UK equities is the uncertainty over sterling.
“Sterling has already weakened materially since the referendum announcement but the confirmation of further ECB easing and the potential for the Bank of Japan to do likewise could lead to further downward pressure on other major global currencies.”
Nield stated that the recent changes take Thesis below the mid-point of its strategic equity allocation range across all seven mandates for the first time in several years.
Elsewhere, Nield also stated that Thesis still remains at the bottom of its fixed income allocation ranges, preferring alternative assets such as infrastructure and commercial property.