Fund group makes 'dash for cash'

SCOTTISH Equitable yesterday become the first fund manager in eight months to make a public "dash for cash", saying it had been prompted by fear of exaggerated profit forecasts.

The life insurer's fund management arm, Scottish Equitable Asset Management, said it believed analysts were overstating corporate earnings by as much as 3 per cent.

Profit forecasts by analysts put UK corporate earnings at 8 per cent in 1998 - but Scottish Equitable said its own analysts put the figure closer to 5 per cent.

Alistair Byrne, investment strategist, said: "We don't think the forecasts fairly discount the slowdown in UK economic growth this year and they don't take account of the sustained strength of the pound up until now. It does have implications for the valuations [of listed companies]."

Mr Byrne said analysts' forecasts appeared sometimes to be influenced by their employment in the same firm as stockbrokers.