Emirates Investment Bank sitting on more cash, trims bond holdings

Emirates Investment Bank (EIB) has trimmed its holdings in fixed income space and are sitting on a fifth of its portfolio in cash because of anticipated volatility due to the Greece crisis.

  

Saturday, Jun 27, 2015

Dubai: Emirates Investment Bank (EIB) has trimmed its holdings in fixed income space and are sitting on a fifth of its portfolio in cash because of anticipated volatility due to the Greece crisis.

“At one level, we are relieved that it [the Greece crisis] hasn’t been as severe as we were concerned about, but we don’t see that the risk is over as yet,” Biswajit Dasgupta, chief investment officer of Treasury at Emirates Investment Bank. “We are holding an amount of cash as we expect to get opportunities due to the volatility from Greece concerns.”

At the asset class level, Emirates Investment Bank has allocated 45 per cent of its portfolio to fixed income, and another 22 per cent to equities.

“We are much more in fixed income than we were 6 months ago, the allocations stood at 50-55 per cent,” Dasgupta said.

“Bonds are expensive in historical measures, so we are not favourably inclined towards sovereign bonds, and there is a certain amount of value in corporate debt space,” Dasgupta said.

EIB, which manages about $1 billion (Dh3.67 billion) in assets, expects to increase its allocations to alternatives.

Dry gun powder

Investors are advised to become a little defensive in asset allocation due to high volatility. Investors should avoid sovereign debt, and become active developed equity markets.

“Investors need to keep some gun powder dry in the form of cash or cash-like instruments to take advantage of the high volatility situation,” Dasgupta added.

“Investors should get out of markets that have less upside than investors would like,” he said.

In general, investors should be prepared emotionally and strategically for a spike in volatility and ideally position themselves to benefit from the spike.

By Siddesh Suresh Mayenkar Staff Reporter

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