"At the moment I’m around 12 per cent in cash, which is my highest in 10 years. That’s a function of the market and a function of our confidence in our process. The market is expensive and our universe is constrained so we are using our full cash and overseas allowance," Stick explained. This year’s rally has meant the manager's fund has underperformed, but he believes it is well-positioned for a market correction.
"I focus on risk at the best price. We sell when things are expensive, so when the markets are expensive our cash levels go up. The current environment can be quite scary; worries on Greece are replaced by the Greek crisis seemingly being sold, and so fears on Portugal grow," he said.
"We have a common sense approach, but I think that’s quite rare. The whole market is guilty of excess, and yesterday’s resignation of Goldman Sachs boss Greg Smith demonstrates this. The market wants you to move from idea to idea. We don’t and that’s how we justify our fee. If you follow the pack you may as well be a tracker fund. Because we have a process and follow it, it means there are times when we underperform the market."
He says that good-value stocks are harder to find than they were in 2011, which is why he is taking profits on some key companies.
"We’ve taken some profits with Diageo. It’s a great company and dominates the Scotch whiskey market, but the share price has reached a point where we think it’s time to sell."
"We’re also selling Intercontinental Hotels, a stock we bought in last year’s market rout at £9.50. It has gone up to £15 and we weren’t willing to pay £14 last year, so need to sell, even though we think it’s a strong company that sells its brands well."
Performance of fund since launch vs sector
Source: FE Analytics
Stick’s five FE-crown fund has returned 407.1 per cent since its launch in 1994, while the average fund in the IMA UK Equity Income sector has returned 244.1 per cent. Our data shows its yield is 4.16 per cent.