More than ten years after sitting out the tech bubble, GMO Funds
] is betting that another asset class is overvalued.
, co-head of asset allocation for the Boston-based fund family, told the Financial Times
that GMO has "largely given up on traditional fixed income," preferring to hold high-quality U.S. equities and cash.
writer Dan McCrum thinks that this is a risky decision, given investors' continuing preference for bond funds, but one that may pay off -- like GMO's decision to eschew tech stocks over a decade ago.
"If GMO is right and prices of government debt fall, its decision could prove a coup to rival its refusal to buy dotcom stocks well before the peak of the internet bubble in 2000. Back then, it suffered three years of investor outflows before eventually being proved right," McCrum writes.
So what does GMO like? Big U.S. and Japanese companies, but mainly cash. Inker says that GMO is holding more cash than at any time but late 2007.
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