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Seneca reduces European holdings as end of investment cycle gets ever closer


Seneca has reduced its European equity holdings, believing that the end of the investment cycle has got ever closer.

Peter Elston, chief investment officer, Seneca Investment Managers, said: “At the end of May we further reduced our equity allocation across all funds, in line with our decision last year to cut exposure every few months as we approach the end of the investment cycle. Most of the reduction was in European equities, where we think inflation pressures are likely to surface next. The proceeds of our reduction in equities went into cash.

“In the short term, while expectations for interest rate hikes may have fallen, the developed world is still very much in tightening mode and increases have been delayed, not abandoned. Wage pressures are accelerating, as a result of low unemployment, and these in turn will feed through to higher inflation.

“As we’ve previously stated, we don’t believe the next bear market is imminent, but we’re preparing well in advance. When driving, you should always start braking as you approach a bend, not when you reach it – the same principle applies to tactical asset allocation. We still believe an economic downturn is likely in 2020 and hence are taking action in advance to mitigate the downside
for investors.

“Equity allocations now stand at 34% for the Seneca Diversified Income Fund, 49% for Seneca Diversified Growth and 54%% for the Seneca Global Income & Growth Trust reduced from 35%, 51% and 55% respectively.”

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