Charity investment funds could be hit by an equity market correction over the summer, according to Baring Asset Management, which is reducing the exposure of its institutional funds to equities in favour of cash.
Those charity fund managers able to increase their cash weighting over the next couple of months should do so, said Baring head of charities James Codrington. "They should also be looking at real assets in the face of an expected resurgence of inflation. Charities should have lightened up on equities and bonds with a view to reinvest after a modest correction later in the summer," he said.
Meanwhile, Percival Stanion, the chair of Baring's strategic policy group, warned that an interest rate hike in the US could catch some investor funds off guard.
The Bank of England is also set to raise interest rates over the summer as it tries to cool the housing market, although UK equities are still inexpensive and so falls are likely to be moderate.
A sharp sell-off was set to spread from the US, said Stanion, with the Iraq conflict worsening the prospects for equities in the short-term.
Baring manages £18.8bn funds for clients including major UK charities.