Peter Askew, co-manager of the T. Bailey Dynamic and T. Bailey Growth funds, has been increasing both funds' sterling weighting in recent months despite a lack of foreign exchange rate volatility, following a period where the currency has been unloved.
In a note to investors back in December 2019, the manager explained that as sterling-based investors, T. Bailey Asset Management was "conscious" of the need to provide outcomes in sterling.
He added in the same note that in the £114m Dynamic fund, which has an objective of UK inflation plus 3%, "any non-sterling position should either diversify the portfolio or be expected to add to the return outcome without undue risk".
Speaking to Investment Week, Askew said: "The point I was making in that note was a lot of people have become somewhat blasé about the amount of non-sterling exposure they have.
"While foreign exchange rates last year had the lowest amount of volatility for some years, that may not be the case this year or going forward."
He added: "Last year was different in terms of volatility of foreign exchange, but over the years that basically becomes a currency fund.
"The key driver of returns is not what you are investing in in terms of the assets, it is what happens to sterling versus other risk currencies - that is what we are trying to point out."
Askew confirmed that in the Dynamic fund, which he co-manages with Elliot Farley, they had increased the sterling weighting to over 80%.
"Dynamic is intended to be a complete solution and it is particularly favoured by a lot of smaller investors - so people who have been almost orphaned by the threshold cost to advisers of increasing regulation," he added.
The latest sales figures published by the Investment Association showed mixed asset was the best-selling asset class in November 2019, clocking up net retail sales
Askew said the increasing popularity of multi-asset funds was "understandable" and that flows had been strongest for T. Bailey's Dynamic fund.
"I think it is harder for individual investors or advisers to make that call, particularly where assets are currently priced," he explained.
"It takes one big decision - obviously it is a big decision, asset allocation - out of the equation and gives it to people who spend their life doing that as a job."
The T. Bailey Dynamic fund has returned 29.4% over five years to 27 January 2020, compared to the Mixed Investment 20-60% Shares sector average of 25.1%, according to FE fundinfo.
Askew said performance was down to "focusing on delivering an outcome that makes sense to the end investor".