Geoff Wilson, the star Australian stock picker who is famously cautious about the Australian market, has 43% of his funds under management in cash.
Wilson Asset Management typically has about 34% in cash, which is much higher than most investment funds where the allocation is typically between 5% and 20%.
But the cash allocation is growing and Wilson revealed the staggering number at an investor event hosted by Livewire in Sydney this afternoon.
It’s reflective of a major trend in Australian investment funds putting more and more of their money into cash, on which the return is between 3% and 4% at the moment.
Investors in stock-picking funds usually look for a return of between 6% and 10%, so as cash allocations grow, the guys managing the money have their work cut out to make up the difference by accurately picking very high-growth stocks.
For a comparison, another speaker on the Livewire panel, Ben Griffiths of Eley Griffiths, who’s bullish on stocks, said he had 9% in cash but would prefer it to be 8%.
The Future Fund, Australia’s $18 billion public service pensions pool, had 15.2% of its funds at the end of March, up from 12.8% in December.
Wilson Asset Management is currently managing around $1 billion in funds. Wilson said today that 42.6% of the money was in cash. So more than $420 million is sitting in the bank, waiting for something to buy.
One fund manager with $150 million under management and who uses Wilson’s fund, was happy with the allocation, telling Business Insider: “At least that is 43% of my funds that wont go down the gurgler unnecessarily.”