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Britain’s largest charity has built up a war chest of over £3.7bn in cash in a bid to safeguard its vast endowments from any impending financial correction and pounce on cut-price stock market opportunities a downturn might produce.
The Wellcome Trust, a medical charity that manages nearly £40bn, revealed in its annual report that it had rejigged its portfolio so it could “step up into any market dislocations” that might arise in the coming months.
“Public equity markets look at least fully priced on any metric, and expensive in a longer-term historical context. This is especially true in the USA, but other markets have seen valuation multiple expansion too,” the report said.
“The real return outlook for listed equities on a five to 10-year view is inevitably more subdued than returns since the global financial crisis,” it added. “At some point this trend will reverse . . . however, timing that inflection point is impossible.”
Wellcome Trust bucks high risk appetite
Cash now accounts for some 8.9 per cent of the trust – one of best endowed charities in the world – far higher than the historic average of between three and five per cent. z
The decision bucks the prevailing risk-on sentiment among asset managers which has helped carry almost all the world’s major stock markets to a string of all-time highs in recent months.
This month, the FTSE 100 sailed past 10,000 points for the first time in its history, while the S&P 500 – New York’s blue-chip index – hit a record on Monday even after Donald Trump’s latest salvo on the Federal Reserve sent gold up over three per cent.
Bank of America’s latest survey of fund managers revealed average cash positions had fallen to just 3.3 per cent, their lowest in history despite signs the AI-fuelled stock market boom was running out of steam.
But Berkshire Hathaway – the feted investment juggernaut famed for its long-term returns and which Wellcome invests in – has also built up $377.5bn cash position, citing fears of frothy valuations and improved yield from higher interest rates.
Fabian Thehos, co-chief investment officer at the Wellcome Trust, said of the large cash pile built up by its Berkshire Hathaway’s former manager Warren Buffet: “We’re certainly in good company in this regard. Our natural inclination probably is to be slightly contrarian.”
