Over half of investment company fund managers have cut exposure to cash and fixed interest to take advantage of buying opportunities created by the market turmoil, according to the Association of Investment Companies
The AIC compared members' exposure to cash and fixed interest at the end of December 2008 with their exposure at the end of May 2009.
Sectors with the greatest drop in exposure over the period were those hardest hit by the financial crisis. These included property securities, sector specialist financials and global emerging markets.
However, there were also marked cuts in exposure to cash and fixed interest by companies in the Global Growth, UK Growth, Global Growth and Income sector.
The Director's Dealing Investment Trust made the largest cut in cash and fixed interest from 60% in December last year to 27% at the end of May.
It was followed by Blue Planet Financials Growth & Income Investment Trust, Blue Planet European Financials Investment Trust, Asset Management Investment Company, Blue Planet Worldwide Financial Investment Trust, Global Special Opportunities, Cayenne Trust and Jupiter Second Enhanced.
"Given that the credit cycle is now entering an expansionary phase, we see clear opportunities in financial stocks going forward, and have therefore allocated more into these financial stocks in recent months," says Shaun Miskell, investment analyst at Blue Planet Investment Advisers.
Despite half of investment company managers cutting their cash and fixed interest exposure, the AIC also notes almost a third have hiked their weightings to the asset classes. A total of 14% have maintained their current levels.
Annabel Brodie-Smith, communications director at the AIC, says there is a clear sector bias, with financials leading the way in buying prospects.
"But it is also interesting to see some of the more traditional investment company sectors like Global Growth and UK Growth taking advantage of long-term buying opportunities," she adds.
Some of these have been fund of funds investing predominantly in the investment company sector itself, namely Advance UK and Cayenne.
"Certainly discounts have narrowed dramatically in the investment company sector from 18% at the beginning of the year to 7% at the end of May."
