Published by Gbaf News
Posted on August 22, 2017
4 min readLast updated: January 21, 2026
Peter Elston, chief investment officer, Seneca Investment Managers, says:
“The growth phase of any business cycle is made up of three sub-phases: ‘recovery’, ‘expansion’ and ‘peak’. The reduction in our US equity weighting to zero reflects the belief that the US economy has entered the expansion phase, during which the tightening of monetary policy will start to hold back equities prices.
“We’re at the point in the cycle when equity returns should start to fall, albeit remain positive, and the move to zero weight in US equities is consistent with the reduction in the Company’s overall equity weighting over the last year. Having moved from overweight to neutral, we are planning to move to an underweight position in equities, starting with the US.
“Other developed economies such as the Eurozone, Japan and the UK are still in recovery phase, as evidenced by interest rates that have yet to be increased. On a valuation basis, we also believe US equities look expensive relative to equities elsewhere.
“The reduction to zero in the US is more a relative call than an absolute one as it’s possible that US equities can continue to rise. However, the reduction is also based on the belief that the US dollar has turned – the possibility of interest rate increases in the medium term in other developed markets such as the Eurozone and the UK argue for strength against the US dollar in other currencies.
“As active managers, it’s essential we take high conviction positions to provide our investors with products that have the potential to deliver strong performance after fund costs. Our investing style, Multi-Asset Value Investing, is designed to then achieve this potential.
“The asset allocation calls we have taken in the last year have resulted in strong returns with the Company up by 25.5% in NAV terms* versus a benchmark increase of 3.5% and a sector return of 15.6%.”
Peter Elston, chief investment officer, Seneca Investment Managers, says:
“The growth phase of any business cycle is made up of three sub-phases: ‘recovery’, ‘expansion’ and ‘peak’. The reduction in our US equity weighting to zero reflects the belief that the US economy has entered the expansion phase, during which the tightening of monetary policy will start to hold back equities prices.
“We’re at the point in the cycle when equity returns should start to fall, albeit remain positive, and the move to zero weight in US equities is consistent with the reduction in the Company’s overall equity weighting over the last year. Having moved from overweight to neutral, we are planning to move to an underweight position in equities, starting with the US.
“Other developed economies such as the Eurozone, Japan and the UK are still in recovery phase, as evidenced by interest rates that have yet to be increased. On a valuation basis, we also believe US equities look expensive relative to equities elsewhere.
“The reduction to zero in the US is more a relative call than an absolute one as it’s possible that US equities can continue to rise. However, the reduction is also based on the belief that the US dollar has turned – the possibility of interest rate increases in the medium term in other developed markets such as the Eurozone and the UK argue for strength against the US dollar in other currencies.
“As active managers, it’s essential we take high conviction positions to provide our investors with products that have the potential to deliver strong performance after fund costs. Our investing style, Multi-Asset Value Investing, is designed to then achieve this potential.
“The asset allocation calls we have taken in the last year have resulted in strong returns with the Company up by 25.5% in NAV terms* versus a benchmark increase of 3.5% and a sector return of 15.6%.”
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