Some funds currently have more invested in the money markets than they did at the height of the credit crunch, our data shows.
FE Alpha Manager Philip Gibbs started ploughing into the money market at the end of last year within his Jupiter International Financials fund, and was holding 46 per cent in cash at the end of last month. The £97m vehicle, which launched at the end of 2009, previously had no weighting to cash.
Performance of fund vs index since launch
Source: FE Analytics
The fund has lost 10 per cent since its launch, our figures show, while its MSCI All World Financials index benchmark has returned 4 per cent.
Looking at a different sector, L&G UK Property Trust currently has 25.7 per cent in cash, compared with a 20 per cent holding in the middle of 2008.
The fund, which has lagged its sector over the past one and three years, had as little as 9.5 per cent in the sector at the start of 2010. Similarly, CF Ruffer Pacific has just over 30 per cent in cash right now, but had less than half of that figure in the middle of 2008.
Performance of fund vs index over 1-yr
Source: FE Analytics
The £157.8m fund, run by FE Alpha Manager Mary McBain, has steadily outperformed its MSCI Asia Pacific benchmark over three and five years, but has seen performance slump over the shorter-term.
"There is a fair bit of caution around at the moment, and if managers have a flexible enough mandate I can see why they would be tempted to move their assets into cash," AFH Wealth Management’s Jonathan Wallis said.
"Clearly, if the market goes down, these funds will fare well, but if things improve it could hamper performance. It depends on your crystal ball."
A high weighting to cash doesn’t necessarily equate to poor performance, however. FE Alpha Manager Peter Walls has recently pulled out of commodities and increased the cash holding in his Unicorn Mastertrust fund.
"I’m generally feeling very pessimistic about the outlook for growth, so am putting a lot into cash right now, as I don’t see a better place to invest," Walls said.
Our data shows the £5m fund holding just shy of 20 per cent in cash. At the start of the year it held 1.8 per cent.
This sector switching hasn’t hampered performance, though. The fund has returned 25 per cent in the past 12 months, while the average fund in the IMA Active Managed sector managed just 13.8 per cent.
Performance of fund vs sector since launch
Source: FE Analytics
The same is true over the longer-term, too. The fund beat its sector over three and five years, and since its launch.