Cordery: Large cash piles will be the norm as liquidity dries up

Schroders' corporate bond manager Adam Cordery expects fund managers will typically hold an average 10% in cash in the future, as liquidity in the market dries up.

Cordery (pictured) has moved his £218m Schroder Monthly High Income and £184m Corporate Bond funds to an 8%-12% cash position in the view banks will not gear up their balance sheets and start lending again for several years. "There is no liquidity in the conventional sense,” he said. “Five years ago managers would be courted by banks and brokers which made trading easy, but now they do not have free balance sheets so they cannot provide us with liquidity.” Fund managers now have to actively manage liquidity within their funds, to maintain flexibility for their investors. “I think i...