Should you have 45% of your portfolio in cash?

Holding cash and top stocks such as Slater & Gordon Limited (ASX:SGH), Mantra Group Ltd (ASX:MTR) and Greencross Limited (ASX:GXL) could be the ideal portfolio mix.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's been a rocky ride for investors recently and it's unlikely that the volatility is over despite the S&P/ASX 200 (INDEXASX: XJO) looking set to end the week on a high.

One fund manager who looks to have timed the market particularly well has been Wilson Asset Management (WAM). WAM manages three listed investment companies (LIC) including the $650 million WAM Capital Limited (ASX: WAM).

WAM Capital's latest monthly report shows that the manager aggressively raised cash levels over the month of September.

From August to September, WAM increased the cash holding of the portfolio by $100 million and instigated a small level of short positions. Perhaps most telling of all, WAM Capital's portfolio weighting as at 30 September 2014 was 45.7% fixed interest and cash!

Better buying ahead.

The high cash levels would suggest that WAM expects better opportunities to buy stocks at lower prices in the future – given the market falls in September it looks a smart move.

Too late to follow?

If you were clever enough (or lucky enough) to get cashed-up prior to the recent market falls you're obviously in a pleasant situation now with a number of stocks available at lower prices than a month ago. Trying to time the market however is notoriously difficult and selling after the fact can leave your portfolio exposed to missing a rebound in stocks.

A safer bet

Rather than moving to cash at this stage, a better option could be to readjust your portfolio holdings into even more appealing opportunities. Some of WAM Capital's largest portfolio positions could be worth considering in this regard – major holdings include Slater & Gordon Limited (ASX: SGH), Mantra Group Ltd (ASX: MTR) and Greencross Limited (ASX: GXL).

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »