Charlotte Yonge, assistant fund manager of the £6.1bn Trojan fund and lead fund manager of its ethical version, said she does not believe in the diversification of alternative assets, such as infrastructure, and instead holds high levels of cash when she is worried about equity valuations, something she is doing at the moment.
Yonge said that people look to infrastructure and other alternative assets because "they offer diversification and lower correlation". "But when markets are stressed, actually, correlations tend to move to one," she explained. "And if you are finding your diversification from illiquidity, that increases the risk in your portfolio rather than actually helping your risk. So, it is not an area we have been tempted to move into." "Today, we find that cash is actually that best way of having balance in the portfolio, while also giving you the optionality to put more money to work when equ...
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